Document:

<PAGE>

                                                                  EXECUTION COPY

    ________________________________________________________________________

                                   INDENTURE

                   ASSET GUARANTY INSURANCE COMPANY, Insurer

                 NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
                      Trustee and Trust Collateral Agent

                                      and

                       TFC AUTOMOBILE RECEIVABLES TRUST
                                1999-1, Issuer

                         Dated as of December 1, 1999

   ________________________________________________________________________
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
                                                                                                  Page
<S>                                                                                               <C>
ARTICLE I.       Definitions and Incorporation by Reference.....................................     3

     SECTION 1.1      Definitions...............................................................     3
     SECTION 1.2      [Reserved]................................................................    10
     SECTION 1.3      Rules of Construction.....................................................    10
     SECTION 1.4      Action by or Consent of Noteholders and Certificateholders................    10
     SECTION 1.5      Material Adverse Effect...................................................    11

ARTICLE II.      The Notes......................................................................    11

     SECTION 2.1      Form......................................................................    11
     SECTION 2.2      Execution, Authentication and Delivery....................................    11
     SECTION 2.3      [Reserved]................................................................    12
     SECTION 2.4      Registration; Registration of Transfer and Exchange.......................    12
     SECTION 2.5      Restrictions on Transfer and Exchange.....................................    12
     SECTION 2.6      Mutilated, Destroyed, Lost or Stolen Notes................................    14
     SECTION 2.7      Persons Deemed Owner......................................................    15
     SECTION 2.8      Payment of Principal and Interest; Defaulted Interest.....................    15
     SECTION 2.9      Cancellation..............................................................    16
     SECTION 2.10     Release of Collateral.....................................................    16
     SECTION 2.11     Notices to Noteholders....................................................    17
     SECTION 2.12     [Reserved]................................................................    17

ARTICLE III.     Covenants......................................................................    17

     SECTION 3.1      Payment of Principal and Interest.........................................    17
     SECTION 3.2      Maintenance of Office or Agency...........................................    17
     SECTION 3.3      Money for Payments to be Held in Trust....................................    17
     SECTION 3.4      Existence.................................................................    19
     SECTION 3.5      Protection of Trust Property..............................................    19
     SECTION 3.6      Opinions as to Trust Property.............................................    20
     SECTION 3.7      Performance of Obligations; Servicing of Receivables......................    21
     SECTION 3.8      Negative Covenants........................................................    22
     SECTION 3.9      Annual Statement as to Compliance.........................................    22
     SECTION 3.10     Issuer May Consolidate, Etc. Only on Certain Terms........................    23
     SECTION 3.11     Successor or Transferee...................................................    25
     SECTION 3.12     No Other Business.........................................................    25
     SECTION 3.13     No Borrowing..............................................................    25
     SECTION 3.14     Servicer's Obligations....................................................    26
     SECTION 3.15     Guarantees, Loans, Advances and Other Liabilities.........................    26
     SECTION 3.16     Capital Expenditures......................................................    26
     SECTION 3.17     Compliance with Laws......................................................    26
     SECTION 3.18     Restricted Payments.......................................................    26
</TABLE>

                                       i
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                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
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     SECTION 3.19     Notice of Events of Default...............................................    26
     SECTION 3.20     Further Instruments and Acts..............................................    27
     SECTION 3.21     Amendments of Sale and Servicing Agreement and Trust Agreement............    27
     SECTION 3.22     Income Tax Characterization...............................................    27

ARTICLE IV.      Satisfaction and Discharge.....................................................    27

     SECTION 4.1      Satisfaction and Discharge of Indenture...................................    27
     SECTION 4.2      Application of Trust Money................................................    28
     SECTION 4.3      Repayment of Monies Held by Note Paying Agent.............................    28

ARTICLE V.       Remedies.......................................................................    29

     SECTION 5.1      Events of Default.........................................................    29
     SECTION 5.2      Rights Upon Event of Default..............................................    30
     SECTION 5.3      Collection of Indebtedness and Suits for Enforcement by Trustee...........    32
     SECTION 5.4      Remedies..................................................................    34
     SECTION 5.5      Optional Preservation of the Receivables..................................    36
     SECTION 5.6      Priorities................................................................    36
     SECTION 5.7      Limitation of Suits.......................................................    37
     SECTION 5.8      Unconditional Rights of Noteholders To Receive Principal and Interest.....    38
     SECTION 5.9      Restoration of Rights and Remedies........................................    38
     SECTION 5.10     Rights and Remedies Cumulative............................................    38
     SECTION 5.11     Delay or Omission Not a Waiver............................................    38
     SECTION 5.12     Control by Noteholders....................................................    39
     SECTION 5.13     Waiver of Past Defaults...................................................    39
     SECTION 5.14     Undertaking for Costs.....................................................    40
     SECTION 5.15     Waiver of Stay or Extension Laws..........................................    40
     SECTION 5.16     Action on Notes...........................................................    40
     SECTION 5.17     Performance and Enforcement of Certain Obligations........................    40
     SECTION 5.18     Subrogation...............................................................    41
     SECTION 5.19     Preference Claims.........................................................    41

ARTICLE VI.      The Trustee and the Trust Collateral Agent.....................................    42

     SECTION 6.1      Duties of Trustee.........................................................    42
     SECTION 6.2      Rights of Trustee and the Trust Collateral Agent..........................    45
     SECTION 6.3      Individual Rights of Trustee..............................................    46
     SECTION 6.4      Trustee's Disclaimer......................................................    46
     SECTION 6.5      Notice of Defaults........................................................    46
     SECTION 6.6      Reports by Note Paying Agent to Holders...................................    46
     SECTION 6.7      Compensation and Indemnity................................................    47
</TABLE>

                                      ii
<PAGE>

                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
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     SECTION 6.8      Replacement of Trustee......................................................    48
     SECTION 6.9      Successor Trustee by Merger.................................................    49
     SECTION 6.10     Appointment of Co-Trustee or Separate Trustee...............................    49
     SECTION 6.11     Eligibility: Disqualification...............................................    51
     SECTION 6.12     [Reserved]..................................................................    51
     SECTION 6.13     Appointment and Powers......................................................    51
     SECTION 6.14     Performance of Duties.......................................................    52
     SECTION 6.15     Limitation on Liability.....................................................    52
     SECTION 6.16     Reliance Upon Documents.....................................................    53
     SECTION 6.17     Successor Trust Collateral Agent............................................    53
     SECTION 6.18     Compensation................................................................    54
     SECTION 6.19     Representations and Warranties of the Trustee and the Trust Collateral Agent    54
     SECTION 6.20     Waiver of Setoffs...........................................................    55
     SECTION 6.21     Control by the Controlling Party............................................    55

ARTICLE VII.     Noteholders' Lists and Reports...................................................    56

     SECTION 7.1      Issuer To Furnish To Trustee Names and Addresses of Noteholders.............    56
     SECTION 7.2      Preservation of Information; Communications to Noteholders..................    56
     SECTION 7.3      Reports by Issuer...........................................................    56

ARTICLE VIII.    Accounts, Disbursements and Releases.............................................    57

     SECTION 8.1      Collection of Money.........................................................    57
     SECTION 8.2      Release of Trust Property...................................................    57
     SECTION 8.3      Opinion of Counsel..........................................................    58

ARTICLE IX.      Supplemental Indentures..........................................................    58

     SECTION 9.1      Supplemental Indentures Without Consent of Noteholders......................    58
     SECTION 9.2      Supplemental Indentures with Consent of Noteholders.........................    59
     SECTION 9.3      Execution of Supplemental Indentures........................................    61
     SECTION 9.4      Effect of Supplemental Indenture............................................    61
     SECTION 9.5      [Reserved]..................................................................    61
     SECTION 9.6      Reference in Notes to Supplemental Indentures...............................    61

ARTICLE X.       Redemption of Notes..............................................................    62

     SECTION 10.1     Redemption..................................................................    62
     SECTION 10.2     Form of Redemption Notice...................................................    62
     SECTION 10.3     Notes Payable on Redemption Date............................................    63

ARTICLE XI.      Miscellaneous....................................................................    63
</TABLE>

                                      iii
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                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
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     SECTION 11.1     Compliance Certificates and Opinions, etc.................................    63
     SECTION 11.2     Form of Documents Delivered to Trustee....................................    65
     SECTION 11.3     Acts of Noteholders.......................................................    66
     SECTION 11.4     Notices, etc. to Trustee, Issuer and Rating Agency........................    66
     SECTION 11.5     Notices to Noteholders; Waiver............................................    67
     SECTION 11.6     Alternate Payment and Notice Provisions...................................    68
     SECTION 11.7     [Reserved]................................................................    68
     SECTION 11.8     Effect of Headings and Table of Contents..................................    68
     SECTION 11.9     Successors and Assigns....................................................    68
     SECTION 11.10    Separability..............................................................    68
     SECTION 11.11    Benefits of Indenture.....................................................    68
     SECTION 11.12    Legal Holidays............................................................    68
     SECTION 11.13    Governing Law.............................................................    68
     SECTION 11.14    Counterparts..............................................................    69
     SECTION 11.15    Recording of Indenture....................................................    69
     SECTION 11.16    Trust Obligation..........................................................    69
     SECTION 11.17    No Petition...............................................................    69
     SECTION 11.18    Inspection................................................................    69
     SECTION 11.19    Limitation of Liability...................................................    70
</TABLE>

EXHIBITS

Exhibit A -- Form of Note

                                      iv
<PAGE>

          INDENTURE dated as of December 1, 1999, among ASSET GUARANTY INSURANCE
COMPANY, a stock insurance company incorporated in the State of New York (the
"Insurer"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association, as trustee (in such capacity, the "Trustee") and trust collateral
agent (in such capacity, the "Trust Collateral Agent") and TFC AUTOMOBILE
RECEIVABLES TRUST 1999-1 (the "Issuer").

          Each party agrees as follows for the benefit of each other party and
for the equal and ratable benefit of the Holders of the Issuer's 7.50% Asset
Backed 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) to the Trust Collateral Agent for the benefit
of the Trustee and the Insurer on behalf of the Noteholders.

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

          As an inducement to the Insurer to issue and deliver the Note Policy,
the Issuer and the Insurer have executed and delivered the Insurance and
Reimbursement Agreement, dated as of December 1, 1999 (as amended from time to
time, the "Insurance Agreement"), among the Insurer, the Issuer, The Finance
Company and TFC Receivables Corporation 2 (the "Seller").

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

                                GRANTING CLAUSE

          The Issuer hereby Grants to the Trust Collateral Agent at the Closing
Date, for the benefit of the Issuer Secured Parties all of the Issuer's right,
title and interest (but none of its obligations) in and to the following
(collectively, the "Collateral"):  (a) the Receivables and all monies paid or
payable thereon or in respect thereof after the Cut-Off Date (including amounts
due on or before the Cut-Off Date but received by TFC, the Servicer, the Seller
or the Issuer on or after the Cut-Off Date); (b)  all rights and interest,
including security interests, in the Financed Vehicles granted by Obligors
pursuant to the Receivables and any other interest of the Issuer in the Financed
Vehicles; (c) all rights of the Seller against Dealers pursuant to Dealer
Agreements, or Dealer Assignments; (d) any proceeds and the right to receive
proceeds with respect to the Receivables repurchased by either (i) a Dealer,
pursuant to a Dealer Agreement, as a
<PAGE>

result of a breach of representation or warranty in the related Dealer
Agreement; (e) all rights under any Service Contracts on the related Financed
Vehicles; (f) any proceeds and the right to receive proceeds with respect to the
Receivables from claims on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or Obligors including rebates of
insurance premiums relating to the Receivables and any proceeds of the
liquidation of Receivables; (g) all funds on deposit from time to time in the
Trust Accounts (including all investments and proceeds thereof), and all rights
of the Issuer therein; (h) the Issuer's rights and benefits, but none of its
obligations or burdens, under the Purchase Agreement, including the delivery
requirements, representations and warranties and the cure and repurchase
obligations of TFC under the Purchase Agreement; (i) property (including the
right to receive future Net Liquidation Proceeds) that secures a Receivable and
that has been acquired by or on behalf of the Trust pursuant to liquidation of
such Receivable; (j) all items contained in the Receivable Files and any and all
other documents that TFC keeps on file relating to the Receivables, the Obligors
or the Financed Vehicles, (k) the Issuer's rights and benefits, but none of its
obligations or burdens, under 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); (l) all rights, title and
interest (but none of the obligations) of the Issuer to any other Basic
Document; and (m) all present and future claims, demands, causes and choses in
action in respect of any or all of the foregoing and all payments on or under
and all proceeds of every kind and nature whatsoever in respect of any or all of
the foregoing, including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing.

          The foregoing Grant is made in trust to the Trust Collateral Agent,
for the benefit of the Trustee on behalf of the Holders of the Notes, and for
the benefit of the Insurer.  The Trust Collateral Agent hereby acknowledges such
Grant, accepts the trusts under this Indenture in accordance with the provisions
of this Indenture and agrees to perform its duties required in this Indenture to
the end that the interests of such parties, recognizing the priorities of their
respective interests, may be adequately and effectively protected.

          It is the intention of the Issuer and the Trustee that this Grant
constitutes a grant or assignment of a valid, first priority perfected security
interest in the Issuer's rights in the Collateral, free and clear of all Liens
(other than the security interest Granted herein) to the Trustee. This Agreement
shall be deemed to create a security interest and be a security agreement with
respect to the Collateral within the meaning of Article 1, Article 8 and Article
9 of the Uniform Commercial Code as in effect in the States of New York and
Minnesota and under the law of all jurisdictions governing the creation and
perfection of security interests in the Collateral.

                                       2
<PAGE>

                                  ARTICLE I.
                                  ----------

                  Definitions and Incorporation by Reference
                  ------------------------------------------

          SECTION 1.1 Definitions.  Except as otherwise specified herein, the
                      -----------
following terms have the respective meanings set forth below for all purposes of
this Indenture.

          "Act" has the meaning specified in Section 11.3(a).

          "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. A Person shall not be
deemed to be an Affiliate of any person solely because such other Person has the
contractual right or obligation to manage such Person unless such other Person
controls such Person through equity ownership or otherwise.

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

          "Basic Documents" means this Agreement, the Certificate of Trust, the
Trust Agreement, the Sale and Servicing Agreement, the Insurance Agreement, the
Certificate to the Trustee, the Indemnification Agreement, the Premium Letter,
the Stock Pledge Agreement, the Purchase Agreement, the Note Purchase
Agreements, the Placement Agency Agreement, the Standby Processing Agreement,
the Securities Account Control Agreement, the Fort Knox Letters and other
documents and certificates delivered in connection therewith.

          "Benefit Plan" has the meaning specified in Section 2.5(f).

          "Business Day" means any day other than a Saturday, Sunday, legal
holiday or other day on which commercial banking institutions located in any of
the states of Delaware, Minnesota, New York, and Virginia are authorized or
obligated by law, executive order or governmental decree to be closed.

          "Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.

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

                                       3
<PAGE>

          "Certificate to the Trustee" has the meaning specified in the Trust
Agreement.

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

          "Closing Date" means December 1, 1999.

          "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 Party" means (a) the Insurer, so long as (i) no Insurer
           -----------------
Default shall have occurred and be continuing, (ii) there are Notes outstanding,
(iii) any amounts due to the Insurer remain unpaid or (iv) the Note Policy has
not expired according to its terms and (b) in all other cases, the Security
Majority.

          "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 the date of execution of this Agreement is located at Sixth
Street and Marquette Avenue, MAC N9311-161, Minneapolis, Minnesota, 55479,
Attention: Corporate Trust Services-Asset Backed Administration or at such other
address as the Trustee may designate from time to time by notice to the
Noteholders, the Insurer, the Servicer and the Issuer, or the principal
corporate trust office of any successor Trustee (the address of which the
successor Trustee will notify the Noteholders and the Issuer).

          "Cut-Off Date" means the close of business on August 31, 1999.

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

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

          "Event of Default" has the meaning specified in Section 5.1.

          "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, the Secretary or the Treasurer of
such corporation.

          "Grant" means mortgage, pledge, bargain, warrant, alienate, remise,
release, convey, assign, transfer, create, grant a lien upon or a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to this Indenture. A Grant

                                       4
<PAGE>

of the Collateral or of any other agreement or instrument shall include all
rights, powers and options (but none of the obligations) of the Granting party
thereunder, including the immediate and continuing right to claim for, collect,
receive and give receipt for principal and interest payments in respect of the
Collateral and all other monies payable thereunder, to give and receive notices
and other communications, to make waivers or other agreements, to exercise all
rights and options, to bring proceedings in the name of the Granting party or
otherwise and generally to do and receive anything that the Granting party is or
may be entitled to do or receive thereunder or with respect thereto.

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

          "Indenture" means this Indenture as amended and 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 Trust Collateral Agent, and the Insurer and the Trustee under
the circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.1, prepared by an Independent appraiser or other
expert appointed pursuant to an Issuer Order and approved by the Trust
Collateral Agent in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of

                                       5
<PAGE>

"Independent" in this Indenture and that the signer is Independent within the
meaning thereof.

          "Institutional Investor" means any "qualified institutional buyer (as
defined in Rule 144A under the Securities Act) or any bank, trust company,
savings and loan association or other financial institution, any pension plan,
any investment company, any insurance company, any broker or dealer, or any
other similar financial institution or entity, regardless of legal form.

          "Insurance Agreement Indenture Cross Default" has the meaning
specified therefor in the Insurance Agreement.

          "Insurer Issuer Secured Obligations" means all amounts and obligations
which the Issuer, TFC or the Seller may at any time owe to or on behalf of the
Insurer under this Indenture, the Insurance Agreement or any other Basic
Document.

          "Interest Rate" means, 7.50% per annum (computed on the basis of a
360-day year consisting of twelve 30-day months).

          "Issuer" means the party named as such in this Indenture until a
successor replaces it in accordance with the terms of the Basic Documents, and,
thereafter, means the successor.

          "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.

          "Issuer Secured Obligations" means the Insurer Issuer Secured
Obligations and the Trustee Issuer Secured Obligations.

          "Issuer Secured Parties" means each of the Trustee in respect of the
Trustee Issuer Secured Obligations and the Insurer in respect of the Insurer
Issuer Secured Obligations.

          "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 Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).

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

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

                                       6
<PAGE>

          "Note Policy Claim Amount" has the meaning specified in the Sale and
Serving Agreement.

          "Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.4.

          "Notes" means the 7.50% Asset Backed Notes, substantially in the form
of Exhibit A.

          "Officer's Certificate" means a certificate signed by the chairman of
the board, the president, any executive vice president, any vice president or
any treasurer, secretary or authorized signatory of the Seller, the Issuer or
the Servicer, as appropriate.

          "Opinion of Counsel" means an opinion of counsel reasonably acceptable
to the Controlling Party and the Trustee, in form and substance reasonably
acceptable to the Controlling Party and 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 the
     Note Paying Agent in trust for the Holders of such Notes (provided,
                                                               --------
     however, that if such Notes are to be redeemed, notice of such redemption
     -------
     has been duly given pursuant to this Indenture or provision therefor,
     satisfactory to the 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;

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

                                       7
<PAGE>

good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Issuer, any other obligor upon the Notes,
the Seller or any Affiliate of any of the foregoing Persons.

          "Outstanding Amount" means the aggregate principal amount of all
Notes, outstanding at the date of determination.

          "Preference Claim" has the meaning specified in the Sale and Servicing
Agreement.

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

          "Rating Agency" means Standard & Poor's Ratings Services ("Standard &
Poor's") so long as Standard & Poor's maintains a rating on the Notes; and if
Standard & Poor's no longer maintains a rating on the Notes, such other
nationally recognized statistical rating organization selected by the Seller and
acceptable to the Controlling Party.

          "Rating Agency Condition" means, with respect to any action, that the
Rating Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to the Rating Agency) prior notice thereof and that the Rating Agency
shall have notified the Seller, the Servicer, the Insurer, 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, without giving
effect to the existence of the Note Policy.

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

          "Redemption Date" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) or a payment to Noteholders pursuant to Section
10.1(b), the Payment Date specified by the Servicer or the Issuer pursuant to
Section 10.1(a) or (b) as applicable.

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

          "Responsible Officer" means, (i) in the case of the Trust Collateral
Agent, the chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president, assistant vice-president or managing director,
the secretary, any assistant secretary or any other officer of the Trust
Collateral Agent customarily performing functions similar to

                                       8
<PAGE>

those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject, and (ii) in the case of the Owner Trustee, any officer
in the corporate trust office of the Owner Trustee or any officer of the Owner
Trustee with direct responsibility for the administration of this Agreement or
any of the Basic Documents on behalf of the Owner Trustee.

          "Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of December 1, 1999, among the Issuer, the Insurer, the Seller, the
Servicer and the Trust Collateral Agent, as the same may be amended or
supplemented from time to time.

          "Securities Account Control Agreement" means the Securities Account
Control Agreement dated as of December 1, 1999, among the Issuer, the Seller,
the Indenture Trustee and Norwest Bank Minnesota, National Association, as
securities intermediary, as the same may be amended or supplemented from time to
time.

          "Scheduled Payments" has the meaning specified in the Note Policy.

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

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

          "Trust Accounts" has the meaning specified in the Sale and Servicing
Agreement.

          "Trust Collateral Agent" means, initially, Norwest Bank Minnesota,
National Association, in its capacity as trust collateral agent on behalf of the
Issuer Secured Parties, including its successors in interest, until and unless a
successor Person shall have become the Trust Collateral Agent pursuant to
Section 6.17 hereof, and thereafter "Trust Collateral Agent" shall mean such
successor Person.

          "Trust Property" means (i) 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 and the Insurer
(including all property and interests Granted to the Trust Collateral Agent),
including all proceeds thereof, the Spread Account and (ii) the right to receive
payments pursuant to the Note Policy.

          "Trustee" means Norwest Bank Minnesota, National Association, a
national banking association, not in its individual capacity but as trustee
under this Indenture, or any successor trustee under this Indenture.

                                       9
<PAGE>

          "Trustee Fee" means the fees due to the Trustee and the Trust
Collateral Agent as may be set forth in that certain fee letter, dated as of the
date hereof between the Servicer and Norwest Bank Minnesota, National
Association.

          "Trustee Issuer 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.

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

          Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Sale and Servicing Agreement or the
Trust Agreement.

          SECTION 1.2  [Reserved].
                        --------

          SECTION 1.3  Rules of Construction.  Unless the context otherwise
                       ---------------------
requires:

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

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

          (iii) "or" is not exclusive;

          (iv)  any form of the word "include" shall be deemed to be followed by
     the words "without limitation"; and

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

          SECTION 1.4 Action by or Consent of Noteholders and
                      ---------------------------------------
Certificateholders. Whenever any provision of this Agreement refers to action to
------------------
be taken, or consented to, by Noteholders or Certificateholders, such provision
shall be deemed to refer to the Certificateholder or Noteholder, as the case may
be, of record as of the Record Date immediately preceding the date on which such
action is to be taken, or consent given, by Noteholders or Certificateholders.
Solely for the purposes of any action to be taken, or consented to, by
Noteholders or Certificateholders, any Note or Certificate registered in the
name of TFC, the Seller or any Affiliate thereof shall be deemed not to be
Outstanding; provided, however, that, solely for the purpose of determining
whether the Trustee or the Trust Collateral Agent is entitled to rely upon any
such action or consent, only Notes or Certificates which the Owner Trustee, the
Trustee or the Trust Collateral Agent, respectively, knows to be so owned shall
be so disregarded.

                                       10
<PAGE>

          SECTION 1.5  Material Adverse Effect. Whenever used in the Basic
                       -----------------------
Documents, "Material Adverse Effect" or "material adverse effect" means (i) when
used with respect to any action, event, fact or other matter or thing, means
that such action, event, fact or other matter or thing will, individually or in
the aggregate, have a material adverse effect on (a) the Trust, the Trust
Property or Collateral, (b) the existence, perfection or priority of the
security interests of the Trust Collateral Agent in the Collateral, (c) the
ability of the Trust Collateral Agent on behalf of the Noteholders and the
Insurer to collect on, liquidate, or foreclose against, the Collateral in
accordance with the Indenture, (d) the validity, enforceability, or the
performance of any Person's obligations under, or with respect to, the Basic
Documents, or the validity, enforceability, or performance of any Person's
obligations under or with respect to, or the payment of, the Notes, (e) the
transactions contemplated by the Basic Documents, (f) the business, operations,
condition (financial or otherwise) of the Servicer, the Seller or the Issuer or
(g) the interests, rights and/or remedies hereunder, or otherwise with respect
to the Trust Property, of the Trust Collateral Agent, the Trustee, the Insurer
or any of the Noteholders (which determination shall be made, in each case,
without giving effect to the existence of the Note Policy), and (ii) when used
in relation to or in connection with any Person also means that such action,
event, fact or other matter or thing shall not, individually or in the
aggregate, have a material adverse effect on the business, operations, condition
(financial otherwise) of such Person.

                                  ARTICLE II.
                                  -----------

                                   The Notes
                                   ---------

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

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

          SECTION 2.2  Execution, Authentication and Delivery. (a) 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 original or
facsimile.

          (b) Notes bearing the original 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 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.

                                       11
<PAGE>

          (c) The Trustee shall upon receipt of the Note Policy and Issuer Order
for authentication and delivery, authenticate and deliver Notes for original
issue in an aggregate principal amount of $65,170,711.

          (d) Each Note shall be dated the date of its authentication.

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

          (f) It is expected that the delivery of the Notes will be made on
December 1, 1999.

          SECTION 2.3  [Reserved].
                       ----------

          SECTION 2.4  Registration; Registration of Transfer and Exchange. (a)
                       ---------------------------------------------------
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 the Notes and, subject to the provisions of
Section 2.5, the registration of transfers of the Notes. The Trustee shall be
"Note Registrar" for the purpose of registering the Notes and transfers of the
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.

          (b) If a Person other than the Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Trustee and the Insurer 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 and the Insurer
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof. The Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Authorized Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.

          (c) All the Notes effected by the registration of transfer or exchange
of the 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. This Section 2.4(c)
shall be the sole method of a transfer or exchange of the Notes.

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

                                       12
<PAGE>

          SECTION 2.5  Restrictions on Transfer and Exchange.  (a) No transfer
                       -------------------------------------
of a Note shall be made unless such transfer is (i) to the Issuer, (ii) to any
person the transferor reasonably believes is a qualified institutional buyer (as
defined in Rule 144A under the Securities Act) in a transaction meeting the
requirements of Rule 144A under the Securities Act or (iii) in a transaction
complying with or exempt from the registration requirements of the Securities
Act and in accordance with any applicable securities laws of any state of the
United States or any other jurisdiction. Each prospective transferee by its
acquisition of any Note, acknowledges that each Note will contain a legend
substantially to the following effect (unless the Issuer determines otherwise in
accordance with applicable law):

               THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
          ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
          SECURITIES LAWS OR "BLUE SKY' LAWS. THE HOLDER HEREOF, BY
          PURCHASING ANY NOTE, AGREES FOR THE BENEFIT OF THE ISSUER THAT
          SUCH NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A
          VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR TRANSFERRED
          ONLY TO (1) THE ISSUER (UPON REDEMPTION THEREOF OR OTHERWISE),
          (2) TO A PERSON THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED
          INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
          ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR
          (3) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
          OF THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE
          SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
          JURISDICTION, IN EACH SUCH CASE, IN COMPLIANCE WITH THE INDENTURE
          AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
          STATES OR ANY OTHER JURISDICTION.

          (b) Each purchaser of any Notes offered and sold in reliance on Rule
144A under the Securities Act will be deemed to have represented and agreed as
follows (terms used in this paragraph that are defined in Rule 144A under the
Securities Act are used herein as defined therein):

             (1) The purchaser (A) is a qualified institutional buyer, (B) is
          aware that the sale to it is being made in reliance on Rule 144A of
          the Securities Act and (C) is acquiring such Notes for its own account
          or for the account of a qualified institutional buyer.

             (2) The Notes are being offered only in a transaction not involving
          any public offering in the United States within the meaning of the
          Securities Act, have not been and will not be registered under the
          Securities Act, and, if in the future the purchaser decides to offer,
          resell, pledge or otherwise transfer such Notes, such Notes may be
          offered,

                                       13
<PAGE>

          resold, pledged or otherwise transferred only in a transaction exempt
          from or not subject to registration requirements of the Securities Act
          and in accordance with any applicable securities laws of any state of
          the United States or any other jurisdiction and in accordance with the
          restrictions set forth in the Notes.

          (c) Any information the purchaser desires concerning the Issuer, the
Notes or any other matter relevant to its decision to purchase the notes is or
has been made available to it.

          (d) Either (i) no part of the assets used by it to acquire the Notes
constitutes assets of any Benefit Plan, (ii) its purchase and holding of the
Notes will not, throughout the term of holding, constitute a non-exempt
"prohibited transaction" under Section 406 of ERISA or Section 4975 of the Code
by reason of the application of one or more statutory or administrative
exemptions from such prohibited transaction rules or otherwise, or (iii) the
source of funds to be used by the purchaser to pay the purchase price of the
Notes is an insurance company general account (as defined in the annual
statement for life insurance companies approved by the National Association of
Insurance Commissioners (the "NAIC Annual Statement") and before reduction for
credits on account of any reinsurance ceded on the coinsurance basis) (the
"Reserves and Liabilities"), for the general account contract(s) held by or on
behalf of any Plan, together with the amount of the Reserves and Liabilities for
the general account contract(s) held by or on behalf of any other Benefit Plans
maintained by the same employer (or any "affiliate" thereof within the meaning
of Section V(a)(1) of PTCE 95-60), does not exceed 10% of the total reserves and
liabilities of such general account plus surplus, as set forth in the NAIC
Annual Statement filed with the state of domicile of the insurance company
maintaining such general account.

          SECTION 2.6  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 and the Insurer (unless an Insurer Default
shall have occurred and be continuing) such security or indemnity as may be
required by it to hold the Issuer, the Trustee and the Insurer harmless
(provided, however, that if the holder of such Note is, or is a nominee for, an
Institutional Investor with a net worth of at least $50,000,000, such
Institutional Investor's own unsecured agreement of indemnity shall be deemed to
be satisfactory then, in the absence of notice to the Issuer, the Note
Registrar, the Insurer or the Trustee that such Note has been acquired by a bona
fide purchaser, and provided that the requirements of Section 8-405 of the UCC
are met, the Issuer, upon the request of the Trustee 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 direct the Trustee, in writing, to pay such destroyed, lost or
stolen Note when so due or payable or upon the Redemption Date without surrender
thereof.  If, after the delivery of such replacement Note or payment of a
destroyed, lost or stolen Note pursuant to the

                                       14
<PAGE>

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, the Trustee and the Insurer shall be entitled to
recover such replacement Note (or such payment) from the Person to whom it was
delivered or any 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 may require the payment by the Holder of such Note of a sum sufficient to
cover any expense, 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) 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.

          SECTION 2.7  Persons Deemed Owner. Prior to due presentment for
                       --------------------
registration of transfer of any Note, the Issuer, the Trustee and any agent of
the Issuer, the Trustee and the Insurer may treat the Person in whose name any
Note is registered (as of the Record Date) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the Insurer, the Trustee nor any agent of the Issuer or the
Trustee shall be affected by notice to the contrary.

          SECTION 2.8  Payment of Principal and Interest; Defaulted Interest.
                       -----------------------------------------------------
(a) The Notes shall bear interest as provided in the forms of the Note set forth
in Exhibit A, and such interest shall be due and payable on each Payment Date as
specified therein. Any installment of interest or principal, if any, payable on
any Note which is punctually paid or duly provided for by the Issuer on the
Payment Date shall be paid to the Person in whose name such Note is registered
on the Record Date, by wire transfer in immediately available funds to such
Person's account as it appears on the Note Register on such Record Date. The
funds represented by any such checks returned undelivered shall be held in
accordance with Section 3.3.

          (b) The principal of each Note shall be payable in installments on
each Payment Date as provided in the forms of the Note set forth in Exhibit A.
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

                                       15
<PAGE>

have occurred and be continuing, or an Insurer Default shall have occurred and
be continuing (if the Trustee or the Holders of the Notes representing not less
than a majority of the Outstanding Amount of the Notes have declared the Notes
to be immediately due and payable in the manner provided in Section 5.2). Upon
written notice from the Issuer, 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 on which the Issuer expects that the final installment of
principal of and interest on such Note will be paid. Such notice shall be mailed
or transmitted by facsimile prior to such final 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 10.2.

          (c) If the Issuer defaults in a payment of interest on the Notes, and
such default is not waived by the Controlling Party, the Issuer shall pay
defaulted interest (plus interest on such defaulted interest to the extent
lawful) at the applicable Interest Rate to the extent lawful. The Issuer may pay
such defaulted interest to the Persons who are Noteholders on a subsequent
special record date, which date shall be at least five Business Days prior to
the payment date. The Issuer shall fix or cause to be fixed any such special
record date and payment date, and, at least 15 days before any such special
record date, the Issuer shall mail to each Noteholder and the Trustee a notice
that states the special record date, the payment date and the amount of
defaulted interest to be paid.

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

          SECTION 2.9  Cancellation.  Subject to Section 2.8(d), 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 in accordance with its customary
procedures. Subject to Section 2.8(d), 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 in accordance with
its customary procedures. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. Subject to Section 2.8(d), 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.

          SECTION 2.10  Release of Collateral.  The Trust Collateral Agent
                        ---------------------
shall, on or after the Termination Date, release any remaining portion of the
Trust Property from the lien created by this Indenture and deposit in the
Collection Account any funds then on deposit in any other Trust Account. The
Trust Collateral Agent shall release

                                       16
<PAGE>

property from the lien created by this Indenture pursuant to this Section 2.10
only upon receipt of an Issuer Request, an Officer's Certificate, and an Opinion
of Counsel meeting the applicable requirements of Section 11.1.

          SECTION 2.11  Notices to Noteholders.  Whenever a notice or other
                        ----------------------
communication to the Noteholders is required under this Indenture, the Trustee
shall give all such notices and communications specified herein to Holders of
the Notes.

          SECTION 2.12  [Reserved]
                         ________

                                  ARTICLE III.

                                   Covenants
                                   ---------

          SECTION 3.1  Payment of Principal and Interest.  The Issuer will duly
                       ---------------------------------
and punctually pay the principal of and interest on the Notes in accordance with
the terms of the Notes and this Indenture. Without limiting the foregoing, the
Issuer will cause to be distributed all amounts on deposit in the Note Payment
Account on a Payment Date deposited therein pursuant to the Sale and Servicing
Agreement for the benefit of the Noteholders. Amounts properly withheld under
the Code or any applicable state tax law by 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 3.2  Maintenance of Office or Agency.  The Trustee will
                       -------------------------------
maintain in the Borough of Manhattan, The City of New York or Minneapolis,
Minnesota, an office or agency where Notes may be surrendered for registration,
transfer or exchange of the Notes, and where notices and demands to or upon the
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 3.3  Money for Payments to be Held in Trust.  On or before
                       --------------------------------------
each Payment Date and Redemption Date, the Issuer shall deposit or cause to be
deposited in the Note Payment Account from the Collection Account an aggregate
sum sufficient to pay the amounts then becoming due under the Notes, such sum to
be held in trust for the benefit of the Persons entitled thereto and (unless the
Note Paying Agent is the Trustee) shall promptly notify the Trustee of its
action or failure so to act.

          The Issuer will cause the Note Paying Agent other than the Trustee to
execute and deliver to the Trustee and the Insurer an instrument in which the
Note Paying Agent shall agree with the Trustee (and if the Trustee acts as Note
Paying Agent, it

                                       17
<PAGE>

hereby so agrees), subject to the provisions of this Section, that the Note
Paying Agent will:

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

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

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

          (iv)  immediately resign as the Note 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 the Note Paying
     Agent at the time of its appointment; and

          (v)   subject to the provisions of the Sale and Servicing Agreement,
     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 the Note Paying Agent to pay to the Trustee all sums held in trust
by the Note Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which the sums were held by the Note Paying Agent; and upon
such a payment by the Note Paying Agent to the Trustee, the Note Paying Agent
shall be released from all further liability with respect to such money.

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

                                       18
<PAGE>

request from the Insurer to such effect; and provided, further, that the Trustee
or the Note Paying Agent, before being required to make any such repayment,
shall 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 the Issuer. The Trustee shall 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 monies due and
payable but not claimed is determinable from the records of the Trustee or of
the Note Paying Agent, at the last address of record for each such Holder).

          SECTION 3.4  Existence.  Except as otherwise permitted by the
                       ---------
provisions of Section 3.10, the 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 under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Property.

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

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

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

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

          (iv)  enforce any of the Collateral;

                                       19
<PAGE>

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

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

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

          SECTION 3.6  Opinions as to Trust Property.
                       ------------------------------

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

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

                                       20
<PAGE>

          SECTION 3.7  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 covenants or obligations under any instrument or agreement included in
the Trust Property or that would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any such instrument or agreement, except as ordered by any
bankruptcy or other court or as expressly provided in this Indenture, the Basic
Documents or such other instrument or agreement.

          (b) The Issuer may contract with other Persons acceptable to the
Controlling Party to assist it in performing its duties under this Indenture,
and any performance of such duties by a Person identified to the Trustee, the
Insurer and the Noteholders 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 to assist the Issuer in performing its duties under this
Indenture.

          (c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Property, including, but
not limited to, preparing (or causing to be prepared) and filing (or causing to
be filed) all UCC financing statements and continuation statements required to
be filed by the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the prior written consent of the Controlling Party (subject to
Section 9.2).

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

          (e) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Seller of their respective duties under the
Basic Documents (x) without the prior written consent of the Controlling Party
or (y) if the effect thereof would adversely affect the Holders of the Notes.

          SECTION 3.8  Negative Covenants. So long as any Notes are
                       ------------------
Outstanding, the Issuer shall not:

          (i) except as expressly permitted by this Indenture or the Basic
     Documents, sell, transfer, exchange or otherwise dispose of any of the
     properties

                                       21
<PAGE>

     or assets of the Issuer, including those included in the Trust Property,
     unless directed to do so by the Controlling Party;

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

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

          SECTION 3.9  Annual Statement as to Compliance.  The Issuer will
                       ---------------------------------
deliver to the Trustee and the Insurer, within 90 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year ended December 31,
1999), 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

                                       22
<PAGE>

     of the United States of America or any state and shall expressly assume, by
     an indenture supplemental hereto, executed and delivered to the Trustee, in
     form satisfactory to the Trustee and the Controlling Party, 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
     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 shall have received an Opinion of Counsel (and shall
     have delivered copies thereof to the Trustee, the Owner Trustee and the
     Insurer (so long as no Insurer Default shall have occurred and be
     continuing)) to the effect that such transaction will not have any material
     adverse tax consequence to the Trust, the Insurer, any Noteholder or any
     Certificateholder;

          (v)   any action as is necessary to maintain the lien and security
     interest created by this Indenture shall have been taken;

          (vi)  the Issuer shall have delivered to the Trustee and the Insurer
     an Officer's Certificate and an Opinion of Counsel 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 complied with (including any filing required
     by the Exchange Act); and

          (vii) so long as (a) no Insurer Default shall have occurred and be
     continuing, (b) any amounts due to the Insurer under the Insurance
     Agreement or the other Basic Documents remain unpaid, or (c) the Note
     Policy has not expired in accordance with its terms, the Issuer shall have
     given the Insurer written notice of such consolidation or merger at least
     20 Business Days prior to the consummation of such action and shall have
     received the prior written approval of the Insurer of such consolidation or
     merger and 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 Property, to
any Person, unless:

          (i) the Person that acquires by conveyance or transfer the properties
     and assets of the Issuer the conveyance or transfer of which is hereby
     restricted 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

                                       23
<PAGE>

     indenture supplemental hereto, executed and delivered to the Trustee, in
     form satisfactory to the Trustee and the Controlling Party, 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 of the Basic Documents 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 prepare (or cause to be prepared) and 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 (and shall
     have delivered copies thereof to the Trustee, the Insurer and the
     Noteholders to the effect that such transaction will not have any material
     adverse tax consequence to the Trust, the Insurer, any Noteholder or any
     Certificateholder;

          (v)    any action as is necessary to maintain the lien and security
     interest created by this Indenture shall have been taken; and

          (vi)   the Issuer shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel 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 Issuer shall have given the Insurer and the Noteholders
     written notice of such conveyance or transfer at least 20 Business Days
     prior to the consummation of such action and shall have received the prior
     written approval of the Insurer of such conveyance or transfer and the
     Issuer or the Person (if other than the Issuer) acquiring or surviving such
     conveyance or transfer 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.

          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

                                       24
<PAGE>

surviving such consolidation or merger (if other than the Issuer) shall 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), TFC Automobile Receivables Trust 1999-1
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 TFC
Automobile Receivables Trust 1999-1 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 Basic Documents
and activities incidental thereto.

          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, (ii) obligations owing from time to time
to the Insurer under the Insurance Agreement and (iii) any other Indebtedness
expressly permitted by or arising under the Basic Documents. The Notes and the
Certificates shall be issued to the Seller as payment for the Receivables under
the Sale and Servicing Agreement and the Seller shall use the proceeds from the
sale of the Notes exclusively to fund the Seller's purchase of the Receivables
and the other assets specified in the Purchase Agreement, to pay the Issuer's
organizational, transactional and start-up expenses and certain other expenses
in connection with the offering and sale of the Notes.

          SECTION 3.14  Servicer's Obligations.  The Issuer shall cause the
                        ----------------------
Servicer to comply with Sections 4.9, 4.10, 4.11 and 5.11 of the Sale and
Servicing Agreement.

          SECTION 3.15  Guarantees, Loans, Advances and Other Liabilities.
                        -------------------------------------------------
Except as expressly permitted 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
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.

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

                                       25
<PAGE>

          SECTION 3.17  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
Basic Document.

          SECTION 3.18  Restricted Payments.  The Issuer shall not, directly or
                        -------------------
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or 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;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Insurer, the Trustee, the Trust
Collateral Agent and the Certificateholders as permitted by, and to the extent
funds are available for such purpose under, the Sale and Servicing Agreement or
Trust Agreement. The Issuer will not, directly or indirectly, make payments to
or distributions from the Collection Account, the Note Payment Account or the
Spread Account except in accordance with this Indenture and the Basic Documents.

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

          SECTION 3.20  Further Instruments and Acts. Upon request of the
                        ----------------------------
Trustee or the Insurer, 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 3.21  Amendments of Sale and Servicing Agreement and Trust
                        ----------------------------------------------------
Agreement. The Issuer shall not agree to any amendment to Section 13.1 of the
---------
Sale and Servicing Agreement or Section 11.1 of the Trust Agreement to eliminate
the requirements thereunder that the Insurer, the Trustee or the Holders of the
Notes consent to amendments thereto as provided therein.

          SECTION 3.22  Income Tax Characterization.  For purposes of federal
                        ---------------------------
income, state and local income and franchise and any other income taxes, the
Issuer will treat the Notes as indebtedness of the Issuer and hereby instructs
the Servicer to treat the Notes as indebtedness of the Issuer for federal and
state tax reporting purposes. Each Noteholder, by virtue of its possession of a
Note, agrees to treat the Notes as indebtedness for federal income, state and
local income and franchise tax purposes. In the event that the Internal Revenue
Service determines (as evidenced by an opinion of counsel is reasonably likely
to determine) that the Notes are equity interests in a partnership for federal
income tax purposes the Issuer will allocate such amounts of

                                       26
<PAGE>

income, loss, etc. so as to replicate as closely as possible the economic
arrangements created hereunder and under the Trust Agreement.

                                  ARTICLE IV.

                           Satisfaction and Discharge
                           --------------------------

          SECTION 4.1  Satisfaction and Discharge of Indenture.  This Indenture
                       ---------------------------------------
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.11, 3.12, 3.13, 3.20, 3.21, 3.22 and 6.6, (v) the rights and immunities
of the Trustee hereunder (including the rights of the Trustee under Section 6.7
and the obligations of the Trustee under Section 4.2) 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
          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 3.3)
          have been delivered to the Trustee for cancellation and the Note
          Policy has expired and been returned to the Insurer for cancellation;
          or

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

                   (i)   have become due and payable,

                   (ii)  will become due and payable at their respective Final
               Scheduled Payment Dates 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
          Trust Collateral Agent cash or direct obligations of or obligations
          guaranteed by the United States of America (which will mature prior to
          the date such amounts are payable), in trust for such purpose, in an
          amount sufficient to pay and discharge the entire indebtedness on such
          Notes not theretofore delivered to the Trustee for cancellation when
          due on the Final Scheduled Payment

                                       27
<PAGE>

          Date or Redemption Date (if Notes shall have been called for
          redemption pursuant to Section 10.1(a)), as the case may be, and the
          Note Policy, in the case of (i), (ii) and (iii) above shall have
          expired on its own terms;

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

          (C) the Issuer has delivered to the Trustee, the Trust Collateral
     Agent and the Insurer an Officer's Certificate and an Opinion of Counsel
     each stating that all conditions precedent herein provided for relating to
     the satisfaction and discharge of this Indenture have been complied with,
     and if required by the Controlling Party, an Independent Certificate from a
     firm of certified public accountants, each meeting the applicable
     requirements of Section 11.1(a) and each stating that all conditions
     precedent herein provided for relating to the satisfaction and discharge of
     this Indenture have been complied with. Upon such satisfaction and
     discharge, the Trustee shall give prompt written notice thereof to Standard
     & Poor's.

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

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

                                  ARTICLE V.

                                   Remedies
                                   --------

          SECTION 5.1  Events of Default.  "Event of Default," wherever used
                       -----------------
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

          (i) default in the payment of any interest on any Note when the same
     becomes due and payable, and such default shall continue for a period of
     one Business Day (solely for purposes of this clause, a payment on the
     Notes funded

                                       28
<PAGE>

     by the Insurer or with proceeds from the Spread Account shall be deemed to
     be a payment made by the Issuer); or

          (ii)  default in the payment of the principal of or any installment of
     the principal of any Note when the same becomes due and payable and such
     default shall continue for a period of one Business Day (solely for
     purposes of this clause, a payment on the Notes funded by the Insurer or
     with proceeds from the Spread Account shall be deemed to be a payment made
     by the Issuer); or

          (iii) so long as (a) an Insurer Default shall not have occurred and be
     continuing, (b) any amounts due to the Insurer under the Insurance
     Agreement or the other Basic Documents remain unpaid or (c) the Note Policy
     has not expired in accordance with its terms, an Insurance Agreement
     Indenture Cross Default shall have occurred; provided, however, that the
     occurrence of an Insurance Agreement Indenture Cross Default may not form
     the basis of an Event of Default unless the Insurer shall, upon prior
     written notice to the Rating Agency, have delivered to the Issuer and the
     Trustee, and not rescinded, a written notice specifying that such Insurance
     Agreement Indenture Cross Default constitutes an Event of Default under the
     Indenture; or

          (iv)  so long as an Insurer Default shall have occurred and be
     continuing, default in the observance or performance of any covenant or
     agreement of the Issuer made in the Certificate to the Trustee; or

          (v)   so long as an Insurer Default shall have occurred and be
     continuing, 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 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 (or for such longer period, not
     in excess of 90 days, as may be reasonably necessary to remedy such
     default; provided that such default is capable of remedy within 90 days or
     less and the Servicer, on behalf of the Owner Trustee, delivers an
     Officer's Certificate to the Trustee to the effect that the Issuer has
     commenced, or will promptly commence and diligently pursue, all reasonable
     efforts to remedy such default) after there shall have been given, by
     registered 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)  so long as an Insurer Default shall have occurred and be
     continuing, the filing of a decree or order for relief by a court having
     jurisdiction

                                       29
<PAGE>

     in the premises in respect of the Issuer or any substantial part of the
     Trust 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 of the Issuer or for any substantial part
     of the Trust Property, or ordering the winding-up or liquidation of the
     Issuer's affairs, and such decree or order shall remain unstayed and in
     effect for a period of 60 consecutive days; or

          (vii) so long as an Insurer Default shall have occurred and be
     continuing, 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, or the consent by the Issuer to the entry of an
     order for relief in an involuntary case under any such law, or 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 Property, or the
     making by the Issuer of any general assignment for the benefit of
     creditors, or the failure by the Issuer generally to pay its debts as such
     debts become due, or the taking of action by the Issuer in furtherance of
     any of the foregoing.

          The Issuer shall as soon as possible deliver to the Trustee, the Owner
Trustee, the Insurer and the Noteholders, and in all events within two Business
Days after the occurrence thereof, written notice in the form of an Officer's
Certificate of any event which with the giving of notice and the lapse of time
would become an Event of Default under clause (iii), its status and what action
the Issuer is taking or proposes to take with respect thereto.

          SECTION 5.2  Rights Upon Event of Default.
                       ----------------------------

          (a) If an Event of Default occurs and is continuing, then and in every
such case, the Controlling Party may declare the unpaid principal amount of all
the Notes to be immediately due and payable at par, together with accrued
interest thereon, and upon such declaration such principal amount shall become
immediately due and payable together with all accrued and unpaid interest
thereon, without presentment, demand, protest or other nature of any kind, all
of which are hereby waived by the Issuer. If an Event of Default shall have
occurred and be continuing, the Controlling Party may exercise any of the
remedies specified in Section 5.4(a). In the event of any acceleration of any
Notes by operation of this Section 5.2, the Trustee shall continue to be
entitled to make claims under the Note Policy pursuant to the Sale and Servicing
Agreement for Scheduled Payments on the Notes. Payments under the Note Policy
following acceleration of any Notes shall be applied by the Trustee:

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

                                       30
<PAGE>

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

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

          (c) If at any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter in this Article V provided the
Insurer (as long as no Insurer Default shall have occurred and be continuing) or
if an Insurer Default shall have occurred and be continuing, the Holders of
Notes representing a majority of the Outstanding Amount of the Notes may by
written notice to the Issuer and the Trustee, rescind and annul such declaration
and its consequences if:

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

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

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

          (ii)  all Events of Default, other than the nonpayment of the
     principal of the Notes that has become due solely by such acceleration,
     have been cured or waived as provided in Section 5.13.

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

          SECTION 5.3  Collection of Indebtedness and Suits for Enforcement
                       ----------------------------------------------------
by Trustee.
----------

          (a) The Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such default
continues for a period of two Business Days, or (ii) default is made in the
payment of the principal of or any installment of the principal of any Note when
the same becomes due and payable, and such default continues for a period of two
Business Days, the Issuer will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of the Notes, the whole amount then due and payable on
such Notes for principal and interest, with interest upon the overdue principal,
and, to the extent payment at such rate of interest shall be

                                       31
<PAGE>

legally enforceable, upon overdue installments of interest, at the applicable
Interest Rate and in addition thereto such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee and its agents
and counsel.

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

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

          (d) [Reserved].

          (e) 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 Property, proceedings under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the 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 and interest owing and unpaid in respect of the Notes and to file
     such

                                       32
<PAGE>

     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, bad faith or willful
     misconduct) and of the Noteholders allowed in such proceedings;

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

          (iii) to collect and receive any monies or other property payable or
     deliverable on any such claims and to distribute all amounts received with
     respect to the claims of the Noteholders, the Insurer 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,
     the Insurer 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.

          (f) 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.

          (g) 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

                                       33
<PAGE>

their respective agents and attorneys, shall be for the ratable benefit of the
Holders of the Notes and the Insurer.

          (h) In any proceedings brought by the Trustee (and also 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.

          SECTION 5.4  Remedies.
                       --------

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

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

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

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

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

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

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

          (B) if the Insurer is the Controlling Party, the Insurer must use due
     care to distribute proceeds in accordance with the requirements and
     priorities of Sections 2.8 and 5.6 of this Indenture, but only to the
     extent such proceeds are in fact received by the Controlling Party.

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

                                       34
<PAGE>

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

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

          In determining such sufficiency or insufficiency with respect to
clause (y) and (z), the 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 Property for such purpose.

          SECTION 5.5  Optional Preservation of the Receivables. If the Trustee
                       ----------------------------------------
is the Controlling Party and if the Notes have been declared to be due and
payable under Section 5.2 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 direct the Trust Collateral Agent to maintain possession of the
Trust Property. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Trustee shall take such desire into account when
determining whether or not to direct the Trust Collateral Agent to maintain
possession of the Trust Property. In determining whether to direct the Trust
Collateral Agent to maintain possession of the Trust Property, the 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 Property for such purpose
which opinion shall be at the expense of the Issuer.

          SECTION 5.6  Priorities.
                       ----------

                                       35
<PAGE>

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

          FIRST: amounts due and owing and required to be
     distributed to the Servicer, the Back-up Servicer, the P.O.
     Box Owner, the Owner Trustee, the Trustee and the Trust
     Collateral Agent, respectively, pursuant to priorities (i)
     and (ii) of Section 5.7(a) 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 Noteholders for amounts due and unpaid on
     the Notes for interest, ratably, without preference or
     priority of any kind, according to the amounts due and
     payable on the Notes for interest;

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

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

          FIFTH: to the Certificateholders in accordance with the
     Trust Agreement.

          (b) 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 Issuer shall mail to each Noteholder and the Trustee a notice that
states the Record Date, the Payment Date and the amount to be paid.

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

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

                                       36

<PAGE>

          (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 own name as Trustee
     hereunder;

          (iii) such Holder or Holders have offered to the Trustee indemnity
     reasonably satisfactory to it 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;

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

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

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

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

          Notwithstanding anything to the contrary contained in this Indenture
but subject to the rights of the Controlling Party hereunder, provided the
Trustee has sent out notices to Noteholders in accordance with this Indenture,
the Trustee may act as directed by a majority of the outstanding Noteholders
responding in writing to such request contained in such notice; provided,
                                                                --------
however, that Noteholders representing at least 66-2/3% of the outstanding
-------
principal balance of the Notes as of the time such notice is sent to Noteholders
must have responded in writing to such notice from the Trustee.  In addition,
the Trustee shall not have any liability to any Noteholder or Note owner with
respect to any action taken pursuant to such notice if the Noteholder or Note
owner does not respond to such notice within the time period set forth in such
notice.

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

                                       37
<PAGE>

          SECTION 5.9    Restoration of Rights and Remedies.  If the Controlling
                         ----------------------------------
Party or any Noteholder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, then and in every such case the Issuer, the Trustee,
the Insurer 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, the Insurer
and the Noteholders shall continue as though no such proceeding had been
instituted.

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

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

          SECTION 5.12   Control by Noteholders. If the Trustee is the
                         ----------------------
Controlling Party, the Holders of a majority of the Outstanding Amount of the
Notes shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the 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 5.4, any direction to
     the Trustee to sell or liquidate the Trust Property shall be by the Holders
     of Notes representing not less than 100% of the Outstanding Amount of the
     Notes;

          (iii) if the conditions set forth in Section 5.5 have been satisfied
     and the Trustee elects to retain the Trust Property 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
     the Trust Property 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;

                                       38
<PAGE>

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

          SECTION 5.13   Waiver of Past Defaults. If (a) an Insurer Default
                         -----------------------
shall have occurred and be continuing, (b) the Note Policy has expired in
accordance with its own terms and (c) there are no amounts due to the Insurer
under the Insurance Agreement or the other Basic Documents that remain unpaid,
prior to the declaration of the acceleration of the maturity of the Notes as
provided in Section 5.4, the Holders of Notes of not less than a majority of the
Outstanding Amount of the Notes may waive any past Default or Event of Default
and its consequences except a Default (a) in payment of principal of or interest
on any of the Notes or (b) in respect of a covenant or provision hereof which
cannot be modified or amended without the consent of the Holder of each Note. In
the case of any such waiver, the Issuer, the Trustee, the Insurer and the
Holders of the Notes shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.

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

          SECTION 5.14   Undertaking for Costs. All parties to this Indenture
                         ---------------------
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the 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

                                       39
<PAGE>

may lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the 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 Property 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 Trust Collateral Agent to
do so and at the Servicer's expense, the Issuer agrees to take all such lawful
action as the Trust Collateral Agent may request to compel or secure the
performance and observance by the Seller and the Servicer, as applicable, of
each of their obligations to the Issuer under or in connection with the Sale and
Servicing Agreement in accordance with the terms thereof, and to exercise any
and all rights, remedies, powers and privileges lawfully available to the Issuer
under or in connection with the Sale and Servicing Agreement to the extent and
in the manner directed by the Trust Collateral Agent, including the transmission
of notices of default on the part of the Seller or the Servicer thereunder and
the institution of legal or administrative actions or proceedings to compel or
secure performance by the Seller or the Servicer of each of their obligations
under the Sale and Servicing Agreement.

          (b)  If the Trustee is a Controlling Party and if an Event of Default
has occurred and is continuing, the Trustee may, and, at the written direction
of the Holders of 66-2/3% of the Outstanding Amount of the Notes shall, exercise
all rights, remedies, powers, privileges and claims of the 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)  The Trustee acknowledges and agrees to the actions to be taken by
the Trust Collateral Agent pursuant to Sections 6.1, 6.2 and 6.3 of the Sale and
Servicing Agreement.

          SECTION 5.18  Subrogation. The Trust Collateral Agent shall receive as
                        -----------
attorney-in-fact of each Noteholder any Note Policy Claim Amount from the
Insurer. Any and all Note Policy Claim Amounts disbursed by the Trustee from
claims made under the Note Policy shall not be considered payment by the Trust
with respect to such Notes, and shall not discharge the obligations of the Trust
with respect thereto. The

                                       40
<PAGE>

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

          SECTION 5.19  Preference Claims.
                        -----------------

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

          (b)  The Trustee shall promptly notify the Insurer of any proceeding
or the institution of any action (of which the Trustee has actual knowledge)
seeking the avoidance as a preferential transfer under applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (a "Preference Claim")
of any distribution made with respect to the Notes. Each Holder, by its purchase
of Notes, and the Trustee hereby agree that so long as (i) an Insurer Default
shall not have occurred and be continuing, (ii) any amounts due to the Insurer
under the Insurance Agreement or the other Basic Documents remain unpaid or
(iii) the Note Policy has not expired in accordance with its terms, the Insurer
may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim including,
without limitation, (1) the direction of any appeal of any order relating

                                       41
<PAGE>

to any Preference Claim and (2) the posting of any surety, supersedes or
performance bond pending any such appeal at the expense of the Insurer, but
subject to reimbursement as provided in the Insurance Agreement. In addition,
and without limitation of the foregoing, as set forth in Section 5.18, the
Insurer shall be subrogated to, and each Noteholder and the Trustee hereby
delegate and assign, to the fullest extent permitted by law, the rights of the
Trustee and each Noteholder in the conduct of any proceeding with respect to a
Preference Claim, including, without limitation, all rights of any party to an
adversary proceeding action with respect to any court order issued in connection
with any such Preference Claim.

                                  ARTICLE VI.

                   The Trustee and the Trust Collateral Agent
                   ------------------------------------------

          SECTION 6.1  Duties of Trustee.
                       -----------------

          (a)  If an Event of Default has occurred and is continuing, the
Trustee and the Trust Collateral Agent shall exercise the rights and powers
vested in it by this Indenture and the Basic Documents and use the same degree
of care and skill in its exercise as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs.

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

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

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

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

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

          (ii)  each of the Trustee and the Trust Collateral Agent shall not be
     liable for any error of judgment made in good faith by a Responsible
     Officer

                                       42
<PAGE>

     unless it is proved that the Trustee or the Trust Collateral Agent was
     negligent in ascertaining the pertinent facts; and

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

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

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

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

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

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

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

          (j)  The Trust Collateral Agent is hereby appointed Note Paying Agent
pursuant to and in accordance with this Indenture, whereby the Trust Collateral
Agent, as Note Paying Agent shall hold the Trust Property in trust for the
Trustee for the benefit of the Noteholders and the Note Issuer.

                                       43
<PAGE>

          (k)  Without limiting the generality of this Section 6.1, 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 Receivables or 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 Sale and Servicing Agreement.

          (l)  In no event shall Norwest Bank Minnesota, National Association,
in any of its capacities hereunder, be deemed to have assumed any duties of the
Owner Trustee under the Delaware Business Trust Statute, common law, or the
Trust Agreement.

          SECTION 6.2  Rights of Trustee and the Trust Collateral Agent.
                       ------------------------------------------------

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

          (b)  Before the Trustee or the Trust Collateral Agent acts or refrains
from acting, it may require an Officer's Certificate or an Opinion of Counsel.
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.

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

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

                                       44
<PAGE>

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

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

          (g)  The Trustee and the Trust Collateral Agent shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in writing to
do so by the Insurer (so long as no Insurer Default shall have occurred and be
continuing) or (if (i) an Insurer Default shall have occurred and be continuing,
or (ii) (A) the Note Policy has expired in accordance with its own terms and (B)
there are no amounts due to the Insurer under the Insurance Agreement or the
other Basic Documents that remain unpaid) 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 and the Trust Collateral Agent
of the costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee or the Trust Collateral
Agent, not reasonably assured to the Trustee or the Trust Collateral Agent by
the security afforded to it by the terms of this Indenture or the Sale and
Servicing Agreement, the Trustee or the Trust Collateral Agent may require
indemnity reasonably satisfactory to it 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 or the Trust Collateral Agent, shall be reimbursed by the Person making
such request upon demand.

          SECTION 6.3  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. The Note Paying Agent, Note Registrar, co-
registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Section 6.11.

          SECTION 6.4  Trustee's Disclaimer.  Each of the Trustee and the Trust
                       --------------------
Collateral Agent shall not be responsible for and makes no representation as to
the

                                       45
<PAGE>

validity or adequacy of this Indenture, the Trust Property 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 6.5  Notice of Defaults. If an Event of Default occurs and is
                       ------------------
continuing and if it is either known by, or written notice of the existence
thereof has been delivered to, a Responsible Officer of the Trustee, the Trustee
shall mail to each Noteholder notice of the Default within 30 days after such
knowledge or notice occurs. Except in the case of a Default in payment of
principal of or interest on any Note (including payments pursuant to the
mandatory redemption provisions of such Note), the 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 6.6  Reports by Note Paying Agent to Holders.  The Note Paying
                       ---------------------------------------
Agent shall on behalf of the Issuer deliver to each Noteholder such information
as is required under the Code (and shall comply will all information reporting
requirements of the Code, e.g. Form 1099) or which may be reasonably requested
to enable each Holder to prepare its income tax returns required by law.

          SECTION 6.7  Compensation and Indemnity.
                       --------------------------

          (a)  Pursuant to Section 5.7(a) of the Sale and Servicing Agreement
and subject to Section 6.18 herein, the Issuer shall, or shall cause the
Servicer to, pay to the Trustee and the Trust Collateral Agent from time to time
the Trustee Fee as compensation for its services. The Trustee's and the Trust
Collateral Agent's compensation shall not be limited by any law on compensation
of a trustee of an express trust. The Issuer shall or shall cause the Servicer
to reimburse the Trustee and the Trust Collateral Agent for all reasonable out-
of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's and the Trust Collateral Agent's agents, counsel, accountants and
experts. The Issuer shall or shall cause the Servicer to indemnify the Trustee,
the Trust Collateral Agent and their respective officers, directors, employees
and agents against any and all loss, liability or expense (including attorneys'
fees) incurred by each of them in connection with the acceptance or the
administration of this trust and the performance of its duties hereunder, except
that neither the Issuer nor the Servicer shall be liable for or required to
indemnify the Trustee from and against expenses arising or resulting from
negligence, bad faith or willful misconduct on the part of the Trustee;
provided, however, any obligation of the Issuer under this Section 6.7 shall not
be payable from the Collateral or Trust Property. The Trustee or the Trust
Collateral Agent shall notify the Issuer and the Servicer promptly in writing of
any claim for which it may seek indemnity. Failure by the Trustee or the Trust
Collateral Agent to so notify the Issuer and the Servicer shall not relieve the
Issuer of its obligations hereunder or the Servicer of its obligations under
Article XII of the Sale and Servicing Agreement, except as provided in the last
sentence of this paragraph. The Issuer shall defend or shall cause the Servicer
to defend any claim for

                                       46
<PAGE>

indemnity that may arise against the Trustee and the Trust Collateral Agent or
the Trustee or the Trust Collateral Agent may have separate counsel and the
Issuer shall or shall cause the Servicer to pay the fees and expenses of such
counsel. Neither the Issuer nor the Servicer need reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee or the
Trust Collateral Agent through the Trustee's or the Trust Collateral Agent's own
willful misconduct, negligence or bad faith.

          (b)  The Issuer's payment obligations to the Trustee pursuant to this
Section shall survive the discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 5.1(v) or (vi)
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 Basic Documents, the Trustee agrees that
the obligations of the Issuer (but not the Servicer) to the Trustee hereunder
and under the Basic Documents shall be recourse to the Trust Property only and
specifically shall not be recourse to the assets of the Issuer or any
Securityholder. In addition, the Trustee agrees that its recourse to the Issuer,
the Trust Property and the Seller shall be limited to the right to receive the
distributions referred to in Section 5.7(a) of the Sale and Servicing Agreement.

          SECTION 6.8  Replacement of Trustee. The Trustee may resign at any
                       ----------------------
time upon 30 days prior written notice by so notifying the Issuer, the Insurer
and the Controlling Party. The Issuer may and, at the request of the Controlling
Party shall, 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, and such case is not dismissed within 30 days;

          (iii) 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;

          (iv)  the Trustee otherwise becomes incapable of acting;

                                       47
<PAGE>

          (v)   the Trustee breaches any representation, warranty or covenant
     made by it under any Basic Document; or

          (vi)  the rating assigned to the long-term unsecured debt obligations
     of the Trustee by the Rating Agency shall be lowered below the rating of
     "BBB" or be withdrawn by the Rating Agency.

          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 deliver a notice of
such removal, resignation or vacancy to the Noteholders and the Insurer and
appoint a successor Trustee acceptable to the Controlling Party. If the Issuer
fails to appoint such a successor Trustee, the Controlling Party may appoint a
successor Trustee.

          A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee, the Insurer, the Noteholders 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 retiring Trustee under this Indenture subject to satisfaction
of the Rating Agency Condition. 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
Controlling Party 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 Section 6.8 and payment of all fees and expenses owed to the
outgoing Trustee. Notwithstanding the replacement of the Trustee pursuant to
this Section, the Issuer's and the Servicer's obligations under Section 6.7
shall continue for the benefit of the retiring Trustee.

          SECTION 6.9 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
Agency and the Insurer with written notice of any such transaction as soon as
practical thereafter.

          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

                                       48
<PAGE>

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 time be located, the Trustee with the
prior written consent of the Controlling Party 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 Collateral, or any
part thereof, 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 6.8 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, including acts or omissions
     of predecessor or successor trustees; 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

                                       49
<PAGE>

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 lawful act under or in respect of this
Agreement on its behalf and in its name.  If any separate trustee or co-trustee
shall die, dissolve, become insolvent, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.   Notwithstanding anything to the
contrary in this Indenture, the appointment of any separate trustee or co-
trustee shall not relieve the Trustee of its obligations and duties under this
Indenture.

          SECTION 6.11   Eligibility: Disqualification. The Trustee shall at all
                         -----------------------------
times (i) have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition, (ii) have (or
have a parent which has) a long term debt rating of A or better by the Rating
Agency; and (iii) be acceptable to the Controlling Party. The Trustee shall
provide copies of such reports to the Insurer.

          SECTION 6.12   [Reserved].
                         ----------

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

                                       50
<PAGE>

provides that the Trust Collateral Agent is permitted to act only following and
in accordance with such instructions.

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

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

          SECTION 6.15   Limitation on Liability. Neither the Trust Collateral
                         -----------------------
Agent nor any of its directors, officers, employees and agents shall be liable
for any action reasonably taken or omitted to be taken by it or them hereunder,
or in connection herewith, except that the Trust Collateral Agent shall be
liable for its negligence, bad faith or willful misconduct; nor shall the Trust
Collateral Agent be responsible for the validity, effectiveness, value,
sufficiency or enforceability against the Issuer of this Indenture or any of the
Collateral (or any part thereof). Notwithstanding any term or provision of this
Indenture, the Trust Collateral Agent shall incur no liability to the Issuer or
the Issuer Secured Parties for any action taken or omitted by the Trust
Collateral Agent in connection with the Collateral, except for the negligence,
bad faith or willful misconduct on the part of the Trust Collateral Agent, and,
further, shall incur no liability to the Issuer Secured Parties except for
negligence, bad faith or willful misconduct in

                                       51
<PAGE>

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

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

          SECTION 6.17   Successor Trust Collateral Agent.
                         --------------------------------

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

          (b)  Resignation.  The Trust Collateral Agent and any successor Trust
               -----------
Collateral Agent may resign under this Indenture at any time upon 30 days prior
written notice by so notifying the Issuer and the Insurer; provided that the
Trust Collateral Agent

                                       52
<PAGE>

shall not so resign unless it shall also resign as Trustee hereunder; provided,
                                                                      --------
however that such resignation shall not be effective until a successor Trust
-------
Collateral Agent shall have accepted appointment as successor Trust Collateral
Agent and a successor Trustee shall have accepted appointment as successor
Trustee.

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

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

                                       53
<PAGE>

          (e)  Notice to the Rating Agency. The Controlling Party shall give
               ---------------------------
Notice to the Rating Agency of any change in the Trust Collateral Agent within 5
days of such change.

          SECTION 6.18   Compensation.  The Trust Collateral Agent shall not be
                         ------------
entitled to any compensation for the performance of its duties hereunder other
than the Trustee Fee it is entitled to receive in its capacity as Trustee.

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

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

          (b)  Corporate Power.  The Trustee and the Trust Collateral Agent has
               ---------------
all requisite right, power and authority to execute and deliver this Indenture
and each of the other Basic Documents to which it is a party and to perform all
of its duties as the Trustee or Trust Collateral Agent, as the case may be,
hereunder.

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

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

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

          SECTION 6.21   Control by the Controlling Party.  Unless otherwise
                         --------------------------------
specifically set forth herein, the Trustee and the Trust Collateral Agent shall
comply with

                                       54
<PAGE>

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

                                 ARTICLE VII.

                        Noteholders' Lists and Reports
                        ------------------------------

          SECTION 7.1    Issuer To Furnish To Trustee Names and Addresses of
                         ---------------------------------------------------
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 as of such Record
Date, (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.  The Trustee or, if the Trustee
is not the Note Registrar, the Issuer shall furnish to the Insurer in writing on
an annual basis on each March 31 and at such other times as the Insurer may
request a copy of the list.

          SECTION 7.2    Preservation of Information; Communications to
                         ----------------------------------------------
Noteholders.
-----------

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

          SECTION 7.3    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 copies of the information, documents and other reports (or copies of
     such portions of any of the foregoing as the Commission may from time to
     time by rules and regulations prescribe) which the 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

                                       55
<PAGE>

          (iii) supply to the Trustee such summaries of any information,
     documents and reports required to be filed by the Issuer pursuant to
     clauses (i) and (ii) of this Section 7.3(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.

          (c)   The Trustee shall not have any duty or obligation with respect
to any reports or other information delivered to it pursuant to this Section
7.3.

                                 ARTICLE VIII.

                     Accounts, Disbursements and Releases
                     ------------------------------------

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

          SECTION 8.2    Release of Trust Property.
                         -------------------------

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

          (b)  The Trust Collateral Agent shall, at such time as there are no
Notes outstanding and all sums due the Trustee pursuant to Section 6.7 have been
paid and (a) the Note Policy has expired in accordance with its own terms and
(b) all amounts due to the Insurer under the Insurance Agreement or the other
Basic Documents have been paid in full, release any remaining portion of the
Trust Property that secured the Notes from the lien of this Indenture and
release to the Issuer or any other Person entitled thereto any

                                       56
<PAGE>

funds then on deposit in the Trust Accounts. The Trustee shall release property
from the lien of this Indenture pursuant to this Section 8.2(b) only upon
receipt of an Issuer Request accompanied by an Officer's Certificate and an
Opinion of Counsel.

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

                                  ARTICLE IX.

                            Supplemental Indentures
                            -----------------------

          SECTION 9.1    Supplemental Indentures Without Consent of Noteholders.
                         ------------------------------------------------------

          (a)   Without the consent of the Holders of any Notes but with prior
written notice to the Rating Agency and with the consent of the Insurer (unless
an Insurer Default shall have occurred and be continuing), as evidenced to the
Trustee, 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, for any of the following purposes:

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

          (ii)  to evidence the succession, in compliance with the applicable
     provisions hereof, of another person to the 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 Trust Collateral Agent;

          (v)   to cure any ambiguity, to correct or supplement any provision
     herein or in any supplemental indenture which may be inconsistent with any
     other

                                       57
<PAGE>

     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, however, that such
     action shall not, as evidenced by an Opinion of Counsel, 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.

          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 but with prior
notice to the Rating Agency by the Issuer and with the prior written consent of
the Insurer, as evidenced to 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 such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder.

          SECTION 9.2    Supplemental Indentures with Consent of Noteholders.
                         ---------------------------------------------------
The Issuer and the Trustee, when authorized by an Issuer Order, also may, with
prior notice to the Rating Agency, with the prior written consent of the Insurer
(unless an Insurer Default shall have occurred and be continuing) and with the
consent of the Holders of not less than a majority of the Outstanding Amount of
the Notes, by Act of such Holders delivered to the 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, subject to
the express rights of the Insurer under the Basic Documents, 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
          with respect thereto, change the provision of this Indenture
          relating to the application of collections on, or the proceeds
          of the sale of, the Trust Property to payment of principal of
          or interest on the Notes, or change any place of payment

                                       58
<PAGE>

            where, or the coin or currency in which, any Note or the
            interest thereon is payable;

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

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

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

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

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

     (vii)  modify any of the provisions of this Indenture in such
            manner as to affect the calculation of the amount of any
            payment of interest or principal due on any Note on any
            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

     (viii) permit the creation of any lien ranking prior to or on a
            parity with the lien of this Indenture with respect to any
            part of the Trust Property or, except as otherwise permitted
            or contemplated herein or in any of the Basic Documents,
            terminate the lien of this Indenture on any property at any

                                       59
<PAGE>

          time subject hereto or deprive the Holder of any Note of the
          security provided by the lien of this Indenture.

          The Trustee may determine whether or not any Notes would be adversely
affected by any supplemental indenture upon receipt of an Opinion of Counsel to
that effect and any such determination shall be conclusive upon the Holders of
all Notes, whether theretofore or thereafter authenticated and delivered
hereunder. The Trustee shall not be liable for any such determination made in
good faith.

          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 9.3    Execution of Supplemental Indentures. In executing, or
                         ------------------------------------
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.1 and 6.2, shall be fully protected in relying upon, an Opinion of
Counsel (and, if requested, an Officer's Certificate) stating that the execution
of such supplemental indenture is authorized or permitted by this Indenture. The
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 9.4    Effect of Supplemental Indenture. Upon the execution of
                         --------------------------------
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the 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 9.5    [Reserved].
                         ----------

          SECTION 9.6    Reference in Notes to Supplemental Indentures.  Notes
                         ---------------------------------------------
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Issuer shall, bear a
notation as to any matter provided for in such supplemental indenture. If the
Issuer shall so determine, new Notes so modified as to conform, in the opinion
of 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.

                                       60
<PAGE>

                                  ARTICLE X.

                              Redemption of Notes
                              -------------------

          SECTION 10.1  Redemption.
                        ----------

          (a)  The Notes are subject to redemption in whole, but not in part, at
the direction of the Seller pursuant to Section 11.1(a) of the Sale and
Servicing Agreement, on any Payment Date on which the Seller or the Servicer,
acting on behalf of and at the direction of the Seller, exercises its option to
make all required payments on the Notes and retain the Trust Property. The
Servicer or the Issuer shall furnish the Insurer prior written notice of such
redemption. If the Notes are to be redeemed pursuant to this Section 10.1(a),
the Servicer or the Issuer shall furnish notice of such election to the Trustee
not later than 35 days prior to the Redemption Date and the Issuer shall deposit
with the Trustee in the Note Payment Account, the Redemption Price of the Notes
Five Business Days prior to the Redemption Date whereupon all such Notes shall
be due and payable on the Redemption Date upon the furnishing of a notice
complying with Section 10.2.

          (b)  In the event that the assets of the Trust are sold pursuant to
Section 9.1 of the Trust Agreement, all amounts on deposit in the Note Payment
Account shall be paid to the Noteholders up to the Outstanding Amount of the
Notes and all accrued and unpaid interest thereon. If amounts are to be paid to
Noteholders pursuant to this Section 10.1(b), the Servicer or the Issuer shall
furnish written notice of such event to the Trustee not later than 45 days prior
to the Redemption Date whereupon all such amounts shall be payable on the
Redemption Date.

          SECTION 10.2  Form of Redemption Notice.
                        -------------------------

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

          All notices of redemption shall state:

          (i)   the Redemption Date;

          (ii)  the Redemption Price;

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

                                       61
<PAGE>

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

          Notice of redemption of the Notes shall be given by the 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.

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

          SECTION 10.3  Notes Payable on Redemption Date. The Notes to be
                        --------------------------------
redeemed shall, following notice of redemption as required by Section 10.2 (in
the case of redemption pursuant to Section 10.1(a) or (b)), 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 11.1  Compliance Certificates and Opinions, etc.
                        -----------------------------------------

          (a)  Upon any application or request by the Issuer to the Trustee or
the Trust Collateral Agent to take any action under any provision of this
Indenture, the Issuer shall furnish to the Trustee or the Trust Collateral
Agent, as the case may be, and to the Insurer if the application or request is
made to the Trust Collateral Agent (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, and (ii) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with.

          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

                                       62
<PAGE>

     such signatory to express an informed opinion as to whether or not such
     covenant or condition has been complied with; and

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

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

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

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

          (iv)    Whenever the Issuer is required to furnish to the Trustee and
     the Insurer an Officer's Certificate certifying or stating the opinion of
     any signer thereof as to the matters described in clause (iii) above, the
     Issuer shall also furnish to the Trust Collateral Agent and the Insurer an
     Independent Certificate as to the same matters if the fair value of the
     property or securities and of all other property other than Purchased
     Receivables and Defaulted Receivables, or securities released from the lien
     of this Indenture since the commencement of the then current calendar year,
     as set forth in the certificates required by clause (iii) above and this
     clause (iv), equals 10% or more of the Outstanding Amount of the

                                       63
<PAGE>

     Notes; provided, that such certificate need not be furnished in the case of
     any release of property or securities if the fair value thereof as set
     forth in the related Officer's Certificate is less than $25,000 or less
     than 1 percent of the then Outstanding Amount of the Notes.

          (v)  Notwithstanding Section 2.10 or any other provision of this
     Section, the Issuer may (A) collect, liquidate, sell or otherwise dispose
     of Receivables as and to the extent permitted or required by the Basic
     Documents and (B) make cash payments out of the Trust Accounts as and to
     the extent permitted or required by the Basic Documents.

          SECTION 11.2  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 or her certificate or
opinion is based are erroneous.  Any such certificate of an Authorized Officer
or Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or officers
of the Servicer, the Seller or the 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 conclusively rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.

                                       64
<PAGE>

          SECTION 11.3  Acts of Noteholders.
                        -------------------

          (a)  Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the 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 6.1) 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 customary manner of the Trustee.

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

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

          SECTION 11.4  Notices, etc. to Trustee, Issuer and Rating Agency. 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 personally delivered, delivered by
overnight courier or mailed first-class and shall be deemed to have been duly
given upon receipt to the Trustee at its Corporate Trust Office, or

          (b)  The Issuer by the Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if personally delivered, delivered by
facsimile or overnight courier or mailed first class, and shall be deemed to
have been duly given upon receipt to the Issuer addressed to: TFC Automobile
Receivables Trust 1999-1, in care of Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, DE 19890-0001 Attention: Corporate
Trust Administration, or at any other address previously furnished in writing to
the Trustee by Issuer. The Issuer shall promptly transmit any notice received by
it from the Noteholders to the Trustee.

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

                                       65
<PAGE>

          To the Insurer:     Asset Guaranty Insurance Company
                              335 Madison Avenue
                              New York, NY 10017-4605
                              Attention: Manager, Asset-Backed
                              Surveillance

                              Fax No.:  (212) 682-5377
                              Tel. No.: (212) 983-5859

          (In each case in which notice or other communication to
          the Insurer refers to an Event of Default, a claim on
          the Note Policy or with respect to which failure on the
          part of the Insurer to respond shall be deemed to
          constitute consent or acceptance, then a copy of such
          notice or other communication should also be sent to
          the attention of Kim Nance-Meier (Fax No.: (212) 682-
          5377).

          Notices required to be given to the Rating Agency by
          the Issuer, the Trustee or the Owner Trustee shall be
          in writing, personally delivered, delivered by
          overnight courier or first class or via facsimile to
          (i) Standard & Poor's, at the following address:
          Standard & Poor's Ratings Services, 26 Broadway (15th
          Floor), New York, New York 10004, Attention: Asset
          Backed Surveillance Department, Fax No: (212) 412-0224,
          or at such other address as shall be designated by
          written notice to the other parties.

          SECTION 11.5  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 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 to Noteholders when such notice is required to be
given pursuant to any provision

                                       66
<PAGE>

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 Agency, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.

          SECTION 11.6   Alternate Payment and Notice Provisions.
                         ---------------------------------------
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Trustee or the Note Paying
Agent to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices, provided that such methods are
reasonable and consented to by the Trustee (which consent shall not be
unreasonably withheld). 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 11.7   [Reserved].
                         ----------

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

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

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

          SECTION 11.11  Benefits of Indenture.  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 the Owner
Trustee and any other party secured hereunder, and any other person with an
ownership interest in any part of the Trust Property, any benefit or any legal
or equitable right, remedy or claim under this Indenture.

                                       67
<PAGE>

          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 an which nominally due, and no interest shall
accrue for the period from and after any such nominal date.

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

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

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

          SECTION 11.16  Trust Obligation.  No recourse may be taken, directly
                         ----------------
or indirectly, with respect to the obligations of the Issuer, the Seller, the
Servicer, the Owner Trustee, the Trust Collateral Agent 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 Insurer, the Seller, the
Servicer, the Trust Collateral Agent, 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 Insurer, the Seller, the Servicer, the Trust Collateral Agent, the
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Seller, the Trust Collateral Agent, the
Servicer, the Owner Trustee or the Trustee or of any successor or assign of the
Seller, the Servicer, the Trust Collateral Agent, 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, the Trust Collateral Agent and the
Owner Trustee have no such obligations in their individual capacity) and except
that any such owner or beneficiary shall be fully liable, to the extent provided
by applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity. For
all purposes of this Indenture, in the performance of any duties or obligations
of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of the Trust Agreement.

                                       68
<PAGE>

          SECTION 11.17  No Petition. The Trustee and the Trust Collateral
                         -----------
Agent, by entering into this Indenture, and each Noteholder, by accepting a
Note, hereby covenant and agree that they will not at any time institute against
the Seller or the 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 Basic Documents.

          SECTION 11.18  Inspection. The Issuer agrees that, on reasonable prior
                         ----------
notice, it will permit any representative of the Trustee, the Insurer and the
Holders of Notes evidencing not less than 25% of the Outstanding Amount thereof
(for purpose of this Section 11.18 only, the principal amount of Notes
Outstanding held by Persons that are affiliates may be aggregated for purposes
of satisfying the 25% threshold), during the Issuer's normal business hours, to
examine all the books of account, records, reports, and other papers of the
Issuer, at the Issuer's expense, 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; provided, however, that if
                                                   --------  -------
the Insurer is the Controlling Party, any expenses of the Noteholders incurred
in connection with this Section 11.18 shall be borne by the Noteholders and not
the Issuer. The Trustee, the Insurer and the Noteholders referenced above, shall
and shall cause its representatives to hold in confidence all such information
except to the extent disclosure may be required by law (and all reasonable
applications for confidential treatment are unavailing) and except to the extent
that the 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 undertaking by the
Issuer under this Agreement or any related documents.

                           [Signature Page Follows]

                                       69
<PAGE>

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

                         ASSET GUARANTY INSURANCE COMPANY

                         By:_______________________________
                         Name:
                         Title:

                         NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, not in
                         its individual capacity but solely as Trustee and Trust
                         Collateral Agent

                         By:_______________________________
                         Name:
                         Title

                         TFC AUTOMOBILE RECEIVABLES
                           TRUST 1999-1

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

                         By:_______________________________
                         Name:
                         Title:

                      [Signature Page for the Indenture]

                                       70
<PAGE>

                                                                       EXHIBIT A
                                 [Form of Note]
REGISTERED                                                         $[__________]
No. A - 1

                      SEE REVERSE FOR CERTAIN DEFINITIONS

                                                          CUSIP No. [__________]

               THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS
          OR "BLUE SKY' LAWS.  THE HOLDER HEREOF, BY PURCHASING ANY NOTE, AGREES
          FOR THE BENEFIT OF THE ISSUER THAT SUCH NOTE IS BEING ACQUIRED FOR ITS
          OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD,
          PLEDGED  OR TRANSFERRED ONLY TO (1) THE ISSUER (UPON REDEMPTION
          THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR  REASONABLY
          BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
          UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
          RULE 144A, OR (3) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
          REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
          APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
          OTHER JURISDICTION, IN EACH SUCH CASE, IN COMPLIANCE WITH THE
          INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
          UNITED STATES OR ANY OTHER JURISDICTION.

          Unless this Note is presented to the Issuer or its agent for
registration of transfer, exchange or payment, ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, has an interest herein.

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

               TFC AUTOMOBILE RECEIVABLES TRUST 1999-1

                            7.50% ASSET BACKED NOTES

                                      B-1
<PAGE>

          TFC Automobile Receivables Trust 1999-1, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to [__________], the
principal sum of $[__________], such amount payable on each Payment Date in an
amount equal to the result obtained by multiplying (i) a fraction the numerator
of which is $[__________] and the denominator of which is $[__________] by (ii)
the aggregate amount, if any, on such Payment Date payable from the Note Payment
Account in respect of principal on the Notes pursuant to Section 3.1 of the
Indenture until the Note Balance is equal to zero; provided, however, that the
entire unpaid principal amount of this Note shall be due and payable on the
April, 2004 Payment Date (the "Final Scheduled Payment Date").  This Note shall
bear interest from the Closing Date until the principal of this Note is paid (or
made available for payment) at the rate per annum shown above (the "Interest
Rate").  Interest on this Note shall be paid as provided in Section 3.1 of the
Indenture.  Interest on this Note shall accrue and be calculated on the basis of
a 360-day year consisting of twelve 30-day months.  Interest on this Note shall
be paid on each Payment Date in an amount equal to the product of (i) one-
twelfth (or, in the case of the first Payment Date only, a fraction, the
numerator of which is equal to the number of days in the initial Interest Period
and the denominator of which is equal to 360) of the Interest Rate and (ii) the
principal amount of this Note outstanding on the preceding Payment Date (after
giving effect to all payments of principal made on the preceding Payment Date)
or, in the case of the first Payment Date only, on the Closing Date.  Such
principal of and interest on this Note shall be paid in the manner specified on
the reverse hereof.

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

          The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Note Policy") issued by Asset Guaranty Insurance Company
(the "Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payments of the Noteholders' Interest Payment Amount on each Payment Date and
the Noteholders' Principal Payment Amount on the Final Scheduled Payment Date,
all as more fully set forth in the Indenture.

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

          Each Noteholder, by acceptance of this Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Trustee on the Notes or
under the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Insurer, the Seller, the Servicer, the Trustee, the
Trust Collateral Agent or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any owner,

                                      B-2
<PAGE>

beneficiary, agent, officer, director or employee of the Insurer, the Seller,
the Servicer, the Trustee, the Trust Collateral Agent or the Owner Trustee in
its individual capacity, any holder of a beneficial interest in the Issuer, the
Seller, the Servicer, the Trust Collateral Agent, the Owner Trustee or the
Trustee or of any successor or assign of the Seller, the Servicer, the Trustee,
the Trust Collateral Agent or the Owner Trustee in its individual capacity,
except as any such Person may have expressly agreed (it being understood that
the Trustee, the Trust Collateral Agent and the Owner Trustee have no such
obligations in their individual capacity) and except that any such owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.

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

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

                                      B-3
<PAGE>

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

                         TFC AUTOMOBILE RECEIVABLES
                           TRUST 1999-1

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

                         By: _________________________________

                              Name:

                              Title:

Date: December 3, 1999

                                      B-4
<PAGE>

                    TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

Date: December 3, 1999                 NORWEST BANK MINNESOTA,
                                       NATIONAL ASSOCIATION, not in its
                                       individual capacity but solely as Trustee

                                       By___________________________
                                            Authorized Signatory

                                      B-5
<PAGE>

                                REVERSE OF NOTE

          This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its 7.50% Asset Backed Notes (herein called the "Notes"), all
issued under an Indenture dated as of December 1, 1999 (such indenture, as
supplemented or amended, is herein called the "Indenture"), among the Insurer,
the Issuer and Norwest Bank Minnesota, National Association, as trustee and
trust collateral agent (the "Trustee", which term includes any successor Trustee
under the Indenture, and the "Trust Collateral Agent", which term includes any
successor Trust Collateral Agent under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights and obligations thereunder of the Insurer, the Issuer, the
Trustee, the Trust Collateral Agent and the Holders of the Notes.  The Notes are
subject to all terms of the Indenture.  All terms used in this Note that are
defined in the Indenture, as supplemented or amended, shall have the meanings
assigned to them in or pursuant to the Indenture, as so supplemented or amended.

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

          Principal of the Notes will be payable on each Payment Date in an
amount described on the face hereof.  "Payment Date" means the 15th day of each
month, or, if any such date is not a Business Day, the next succeeding Business
Day, commencing December 15, 1999.

          As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Final Scheduled Payment Date and
the Redemption Date, if any, pursuant to Section 10.1(a) or 10.1(b) of the
Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of
the Notes shall be due and payable (i) on the date on which an Insurance
Agreement Indenture Cross Default shall have occurred and the Insurer shall have
delivered to the Trustee a written notice specifying that an Insurance Agreement
Indenture Cross Default constituting an Event of Default under the Indenture has
occurred or (ii) if an Insurer Default shall have occurred and be continuing, on
the date on which an Event of Default shall have occurred and be continuing and
the Trustee or the Holders of the Notes representing at least 66-2/3% of the
Outstanding Amount of the Notes have declared the Notes to be immediately due
and payable in the manner provided in Section 5.2 of the Indenture.  All
principal payments on the Notes shall be made pro rata to the Noteholders
entitled thereto.

          Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by wire transfer in immediately
available funds to the Person whose name appears as the Holder of this Note on
the Note Register as of the close of business on the related Record Date.  Such
payments shall be wired to the Person entitled thereto to the account of such
Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Note be submitted for notation of payment.  Any
reduction in the principal amount of this Note effected by any payments made on
any Payment Date shall be binding upon all future Holders of this Note and of
any Note

                                      B-6
<PAGE>

issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Trustee, in the name
of and on behalf of the Issuer, will notify the Person who was the Holder hereof
as of the Record Date preceding such Payment Date by notice mailed prior to such
Payment Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Trustee's principal Corporate
Trust Office or at the office of the Trustee's agent appointed for such purposes
located in Minneapolis, Minnesota; provided, however, that such presentation and
surrender shall be waived with respect to any Noteholder upon satisfaction by
the Noteholder of the indemnity requirements set forth in the Indenture (and not
rescinded).

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

          As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.1(a) of the Indenture, in whole, but not in part, at the option of
the Seller on any Payment Date on or after the date on which the Pool Balance is
less than or equal to 15% of the Original Pool Balance.

          As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar which requirements include
membership or participation in Securities Transfer Agents Medallion Program
("Stamp") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, Stamp, all in
accordance with the Exchange Act, and (ii) accompanied by such other documents
as the Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees.  No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.  Each Noteholder, by acceptance of a Note, covenants and agrees to
treat the Notes as indebtedness for federal, state and local income and
franchise tax purposes.

          Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder 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

                                      B-7
<PAGE>

connection with any obligations relating to the Notes, the Indenture or the
Basic Documents.

          Each purchaser of this Note will be deemed to have represented that
either (a) it is not a Benefit Plan and is not acting on behalf of or investing
the assets of a Benefit Plan or (b) the transferee's purchase and holding of
such interest will be covered by a U.S. Department of Labor Prohibited
Transaction Class Exemption or (c) the source of funds to be used by the
Purchaser to the Purchase Price of the Securities is an insurance company
general account (as defined in the annual statement for life insurance companies
approved by the National Association of Insurance Commissioners (the "NAIC
Annual Statement") and before reduction for credits on account of any
reinsurance ceded on the coinsurance basis) (the "Reserves and Liabilities"),
for the general account contract(s) held by or on behalf of any Plan, together
with the amount of the Reserves and Liabilities for the general account
contract(s) held by or on behalf of any other Plans maintained by the same
employer (or any "affiliate") thereof within the meaning of Section V(a)(1) of
PTCE 95-60), does not exceed 10% of the total Reserves and Liabilities of such
general account plus surplus, as set forth in the NAIC Annual Statement filed
with the state of domicile of the insurance company maintaining such general
account.

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

          The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Insurer and of the Holders of Notes
representing a majority of the Outstanding Amount of all Notes at the time
Outstanding.  The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of the Notes,
on behalf of the Holders of all the Notes, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences.  Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note.  The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.

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

                                      B-8
<PAGE>

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

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

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

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

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

                                      B-9
<PAGE>

                                  ASSIGNMENT

Social Security or Taxpayer I.D. or other identifying number of assignee: ______

          FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
________________________________________________________________________
________________________________________________________________________
                        (name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints __________________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.

Dated: ________________             _____________________________*

                                    Signature Guaranteed:

Dated: ________________             _____________________________

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

                                     B-10<PAGE>

                                                             [Execution Version]

                     INSURANCE AND REIMBURSEMENT AGREEMENT

                                     among

                       ASSET GUARANTY INSURANCE COMPANY,

                   TFC AUTOMOBILE RECEIVABLES TRUST 1999-1,

                        TFC RECEIVABLES CORPORATION 2,

                             THE FINANCE COMPANY,

                                      and

                 NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION

                         Dated as of December 1, 1999
<PAGE>

                     INSURANCE AND REIMBURSEMENT AGREEMENT

     THIS INSURANCE AND REIMBURSEMENT AGREEMENT (this "Insurance Agreement") is
                                                       -------------------
made as of December 1, 1999 among Asset Guaranty Insurance Company, a stock
insurance company incorporated in the State of New York, as note insurer

("AGIC"), TFC Automobile Receivables Trust 1999-1, a Delaware business trust
  ----
(individually, the "Trust"), as issuer (the "Issuer"), TFC Receivables
                    -----                    ------
Corporation 2, a Delaware corporation ("TFCRC"), The Finance Company, a Virginia
                                        -----
corporation (individually, "TFC") and as servicer (together with its successors
                            ---
and assigns in such capacity, including without limitation the Back-up Servicer
(as defined below) and any successor servicer appointed pursuant to the Sale and
Servicing Agreement (as defined below), the "Servicer") and Norwest Bank
                                             --------
Minnesota, National Association, a national banking association (individually

"Norwest"), as trustee (together with its successors and assigns, in such
--------
capacity, the "Trustee"),  as trust collateral agent (together with its
               -------
successors and assigns, in such capacity, the "Trust Collateral Agent"), and as
                                               ----------------------
back-up servicer (in such capacity, the "Back-up Servicer").
                                         ----------------

                            PRELIMINARY STATEMENTS

     The Issuer will issue (a) the TFC 7.50% Asset Backed Notes, Series 1999-1
(the "Notes") pursuant to the Indenture, dated as of December 1, 1999, among the
      -----
Issuer, AGIC and Norwest as Trustee and Trust Collateral Agent (as the same may
be amended, restated, supplemented or otherwise modified from time to time, the
"Indenture") and (b) a certificate (the "Certificate") pursuant to the Amended
 ---------                               -----------
and Restated Trust Agreement, dated as of December 1, 1999, between Wilmington
Trust Company as owner trustee (together with its successors and assigns, in
such capacity, the "Owner Trustee") and TFCRC as depositor (as the same may be
                    -------------
amended, restated, supplemented or otherwise modified from time to time, the
"Trust Agreement").
----------------

     Pursuant to the Indenture, the Issuer will grant to the Trust Collateral
Agent for the benefit of the Trustee on behalf of the Noteholders and AGIC, to
secure repayment of the Notes (and other related amounts), a security interest
in collateral consisting of all of the Issuer's right, title and interest in, to
and under a pool of receivables, including, among other types of receivables,
receivables of retail installment sale contracts secured by the financed
vehicles and certain other assets and rights, all as more fully set forth in the
Indenture (the "Trust Property").  Such receivables and related assets
                --------------
constituting a part of the Trust Property were sold to the Issuer pursuant to
the Sale and Servicing Agreement, dated as of December 1, 1999, among the
Issuer, TFCRC as seller (the "Seller"), the Servicer, AGIC, the Trust Collateral
                              ------
Agent, the Back-up Servicer and Norwest as P.O. Box owner (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Sale and Servicing Agreement"); and
 ----------------------------

     AGIC is authorized to transact a financial guaranty insurance business in
the State of New York and has agreed, subject to the terms and conditions of
this Insurance Agreement, to issue to the Trustee, for the benefit of the
Noteholders, a financial guaranty insurance policy substantially in the form of
Exhibit A hereto (the "Policy"); and
                       ------

                                       2
<PAGE>

     The parties hereto, among other things, desire to specify the conditions
precedent to the issuance by AGIC of the Policy, the obligations of the Issuer,
the Servicer, the Back-up Servicer and TFC, as applicable, to make payments in
respect of premiums, reimbursement obligations and other amounts relating to the
Policy, and to perform certain other obligations in respect of the issuance of
the Policy, and to provide for certain other matters related thereto.

     NOW, THEREFORE, in consideration of the premises and of the agreements
herein contained, AGIC, the Issuer, the Servicer, TFC, the Parent, the Trustee,
the Trust Collateral Agent and the Back-up Servicer agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

     Section 1.01.  General Definitions.  The terms defined in this Article I
                    -------------------
shall have the meanings provided herein for all purposes of this Insurance
Agreement, unless the context clearly requires otherwise, in both singular and
plural form, as appropriate.  Capitalized terms used and not otherwise defined
herein shall have the meanings assigned to such terms in the Indenture or the
Sale and Servicing Agreement (as applicable).

     "Affiliate" means, as 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" or "controlled" have meanings
correlative to the foregoing.

     "AGIC" has the meaning assigned to such term in the Preliminary Statements
      ----
above.

     "AGIC Information" has the meaning given to such term under the
      ----------------
Indemnification Agreement.

     "Back-up Servicer" has the meaning assigned to such term in the Preliminary
      ----------------
Statements above.

     "Certificate" has the meaning assigned to such term in the Preliminary
      -----------
Statements above.

     "Closing Date" means December 1, 1999.
      ------------

     "Commonly Controlled Entity" means TFC and each entity, whether or not
      --------------------------
incorporated, which is affiliated with TFC pursuant to Section 414(b), (c), (m)
or (o) of the Code.

     "Cumulative Net Loss Rate" means with respect to any Determination Date,
      ------------------------
the fraction, expressed as a percentage, the numerator of which is equal to the
aggregate amount of Net Losses through the end of the related Monthly Period for
such Determination Date and the denominator of which is equal to the Original
Pool Balance.

                                       3
<PAGE>

     "Cumulative Net Loss Test Failure" means, with respect to any Determination
      --------------------------------
Date occurring during a period set forth below, the Cumulative Net Loss Rate for
such Determination Date shall be greater than the percentage set forth below
opposite the period during which such Determination Date occurs:

<TABLE>
<CAPTION>
     Period                                                                  Maximum Percentage
     ------                                                                  ------------------
     <S>                                                                     <C>
     from the Initial Cut-Off Date to third Monthly                                1.40%
     Period to occur after the Initial Cut-Off Date

     from the fourth Monthly Period to occur                                       4.80%
     after the Initial Cut-Off Date to sixth Monthly
     Period to occur after the Initial Cut-Off Date

     from the seventh Monthly Period to occur                                     11.30%
     after the Initial Cut-Off Date to the ninth Monthly
     Period to occur after the Initial Cut-Off Date

     from the tenth Monthly Period to occur                                       17.50%
     after the Initial Cut-Off Date to the 12th Monthly
     Period to occur after the Initial Cut-Off Date

     from the 13th Monthly Period to occur                                        17.80%
     after the Initial Cut-Off Date to the 15th Monthly
     Period to occur after the Initial Cut-Off Date

     from the 16th Monthly Period to occur                                        18.20%
     after the Initial Cut-Off Date to the 18th Monthly
     Period to occur after the Initial Cut-Off Date

     from the 19th Monthly Period to occur                                        19.10%
     after the Initial Cut-Off Date to the 21st Monthly
     Period to occur after the Initial Cut-Off Date

     from the 22nd Monthly Period to occur                                        20.00%
     after the Initial Cut-Off Date to the 24th Monthly
     Period to occur after the Initial Cut-Off Date

     from the 25th Monthly Period to occur                                        20.90%
     after the Initial Cut-Off Date to the 27th Monthly
     Period to occur after the Initial Cut-Off Date
     from the 28th Monthly Period to occur after                                  21.80%
     after the Initial Cut-Off Date and at any time
     thereafter.
</TABLE>

     "Delinquency Category" means (a) for Receivables having monthly Scheduled
      --------------------
Payments ("Monthly-Pay Contracts, as defined in Schedule 1) in respect of which
the relevant Obligor shall have failed to make a Scheduled Payment or a portion
thereof on the due date therefor, the

                                       4
<PAGE>

applicable Delinquency Category into which such Receivable falls based on the
number of months delinquent, as described in Schedule 1 hereto and (b) for
Receivables not having monthly Scheduled Payments ("Non-Monthly-Pay Contracts,"
as defined in Schedule 1) in respect of which the relevant Obligor shall have
failed to make a Scheduled Payment or a portion thereof on the due date
therefor, the applicable Delinquency Category into which such Receivable falls
based on the number of weeks delinquent, as described in Schedule 1 hereto.

     "Delinquent Receivable" means a Receivable which (a) falls into any
      ---------------------
Delinquency Category other than the "Current" category (as described in Schedule
I hereto) and (b) is not a Liquidated Receivable.

     "Deemed Cured" means, as of a Determination Date, (a) with respect to a
      ------------
Trigger Event that has occurred solely as a result of the occurrence of a
Delinquency Test Failure, that no Trigger Event or any Insurance Agreement Event
of Default shall have occurred as of such Determination Date or as of any of the
three (3) next preceding Determination Dates; or (b) with respect to any other
Trigger Event, that no Trigger Event or any Insurance Agreement Event of Default
shall have occurred as of such Determination Date or as of any of the six (6)
next preceding Determination Dates.

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

     "Delinquency Ratio" means, with respect to any Determination Date, the
      -----------------
fraction, expressed as a percentage, (a) the numerator of which is equal to the
sum of the Principal Balances (as of the related Accounting Date) of all
Receivables that are Delinquent Receivables as of the related Accounting Date,
or that became Purchased Receivables as of the related Accounting Date and were
Delinquent Receivables as of such Accounting Date and (b) the denominator of
which is equal to the Aggregate Principal Balance as of such Accounting Date.

     "Delinquency Test Failure" means, with respect to any Determination Date
      ------------------------
occurring during a period set forth below, the arithmetic average of the
Delinquency Ratios for such Determination Date and the two immediately preceding
Determination Dates shall be greater than the percentage set forth below
opposite the period during which such Determination Date occurs:

<TABLE>
<CAPTION>
     Period                                                                   Maximum Percentage
     ------                                                                   ------------------
     <S>                                                                      <C>
     from the Initial Cut-Off Date to the 12th                                     17.00%
     Monthly Period to occur after the
     Initial Cut-Off Date

     from the 13th Monthly Period to                                               20.00%
     occur after the Initial Cut-Off Date to the
     18th Monthly Period to occur after
     the Initial Cut-Off Date

     from the 19th Monthly Period to occur                                         25.00%
     after the Initial Cut-Off Date and at any time
</TABLE>

                                       5
<PAGE>

     thereafter.

     "ERISA" means the Employee Retirement Income Security Act of 1974,
      -----
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.

     "Event of Default" has the meaning assigned to such term in the Indenture.
      ----------------

     "Financial Statements" means with respect to each of TFC and the Parent,
      --------------------
the audited consolidated balance sheets as of December 31, 1998 and the
statements of income, shareholder's equity and cash flows for the 12-month
period then ended and the notes thereto, and the unaudited consolidated balance
sheets as of June 30, 1999 and the consolidated statements of income and cash
flows for the fiscal quarter then ended.

     "Fort Knox Acknowledgment Letter" means the letter agreement by TFC, dated
      -------------------------------
as of December 1, 1999, acknowledged and agreed to by Fort Knox National Company
and the Trust Collateral Agent.

     "Fort Knox Additional Letters" means (a) the letter agreement by TFC, dated
      ----------------------------
as of December __, 1999, acknowledged and agreed to by Fort Knox National
Company and the Trust Collateral Agent (with respect to TFC's TrueCheck Program)
and (b) the letter agreement by TFC, dated as of December __, 1999, acknowledged
and agreed to by Fort Knox National Company and the Trust Collateral Agent (with
respect to TFC's ACH Program).

     "GAAP" means generally accepted accounting principles in effect from time
      ----
to time in the United States of America.

     "GE Capital" means General Electric Capital Corporation, a New York
      ----------
corporation.

     "GE Capital Agreement" means the Amended and Restated Motor Vehicle
      --------------------
Installment Contract Loan and Security Agreement, dated as of January 1, 1999,
between GE Capital as lender and TFC as borrower.

     "Governmental Authority" means any nation or government, any state or other
      ----------------------
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
as in effect on the date hereof.

     "Indemnification Agreement" means the Indemnification Agreement, dated as
      -------------------------
of December 1, 1999, among AGIC, the Issuer, the Placement Agent and TFC.

     "Indenture" has the meaning assigned to such term in the Preliminary
      ---------
Statements above.

     "Independent Accountants" has the meaning specified in Section 4.01(q).
      -----------------------

     "Independent Director" means a natural person who (i) is not a stockholder
      --------------------
(whether direct, indirect or beneficial), customer, advisor or supplier of
TFCRC, the Parent or any of their respective Affiliates (other than by means of
indirect stock ownership of  TFCRC or the Parent or of any of their respective
Affiliates by any Person through a mutual fund or similar diversified

                                       6
<PAGE>

investment pool); (ii) is not a director, officer, employee or Affiliate of
TFCRC or the Parent or any of their respective Affiliates; (iii) is not a Person
related to any Person referred to in clauses (i) and (ii); (iv) is not a
trustee, conservator or receiver for any of TFCRC or the Parent or any of their
respective Affiliates; and (v) has (A) prior experience as an independent
director or independent manager for a corporation or limited liability company
whose charter documents require the unanimous written consent of all independent
directors or independent managers thereof before such corporation or limited
liability company could consent to the institution of bankruptcy or insolvency
proceedings against it or could file a petition seeking relief under any
applicable federal or state law relating to bankruptcy, and (B) at least three
years of employment experience with one or more entities that provide, in the
ordinary course of their respective businesses, advisory, management or
placement services to issuers of securitization or structured finance
instruments, agreements or securities.

     "Initial Cutoff Date" means August 31, 1999.
      -------------------

     "Initial Spread Account Deposit Amount" means 4.00% of the Original Pool
      -------------------------------------
Balance.

     "Insurance Agreement" has the meaning assigned to such term in the
      -------------------
Preliminary Statements above.

     "Insurance Agreement Event of Default" has the meaning specified in Section
      ------------------------------------
6.01.

     "Insurance Agreement Indenture Cross Default" means any Insurance Agreement
      -------------------------------------------
Event of Default specified in clauses (a), (c) (e), (f), (l), (m) of Section
6.01.

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

     "IRS" means the Internal Revenue Service.
      ---

     "Issuer" has the meaning assigned to such term in the Preliminary
      ------
Statements above.

     "Lien" means, as applied to the property or assets (or the income or
      ----
profits therefrom) of any Person, in each case whether the same is consensual or
nonconsensual or arises by contract, operation of law, legal process or
otherwise:  (a) any mortgage, lien, pledge, attachment, charge, lease,
conditional sale or other title retention agreement, or other security interest
or encumbrance of any kind or (b) any arrangement, express or implied, under
which such property or assets are transferred, sequestered or otherwise
identified for the purpose of subjecting or making available the same for the
payment of debt or performance of any other obligation in priority to the
payment of the general, unsecured creditors of such Person.

     "Material Adverse Change" means, (a) in respect of any Person, a material
      -----------------------
adverse change in (i) the business, financial condition, results of operations
or properties of such Person or any of its Subsidiaries or (ii) the ability of
such Person to perform its obligations under any of the Basic Documents to which
it is a party and (b) in respect of the Receivables, a material adverse change
in (i) the value or marketability of the Receivables, taken as a whole, or (ii)
the

                                       7
<PAGE>

probability that amounts now or hereafter due in respect of a material portion
of the Receivables will be collected on a timely basis.

     "Multiemployer Plan" means a multiemployer plan (within the meaning of
      ------------------
Section 400 1(a)(3) of ERISA) in respect of which a Commonly Controlled Entity
makes contributions or has liability.

     "Net Losses" means, with respect to any Determination Date and the most
      ----------
recently concluded Monthly Period, the positive difference of (a) the sum of (i)
the aggregate amount of the Principal Balances as of the related Accounting Date
(plus accrued and unpaid interest through and including such Accounting Date, at
the applicable APR) of all Receivables that became Liquidated Receivables since
the Initial Cutoff Date, plus (ii) the aggregate Cram Down Losses as of the
related Accounting Date that occurred since the Initial Cutoff Date, over (b)
the aggregate, cumulative Net Liquidation Proceeds received by the Issuer as of
the related Accounting Date since the Initial Cutoff Date.

     "Notes" has the meaning assigned to such term in the Preliminary Statements
      -----
above.

     "Offering Document" means the Preliminary Private Placement Memorandum
      -----------------
dated December 1, 1999, and the Private Placement Memorandum dated December 1,
1999 relating to the Notes and any amendment or supplement thereto and any other
offering document in respect of the Notes that makes reference to the Policy.

     "Owner Trustee" has the meaning assigned to such term in the Preliminary
      -------------
Statements above.

     "Parent" means TFC Enterprises, Inc., a Delaware corporation.
      ------

     "Parent Support Agreement" means the agreement among TFCRC, TFC, AGIC, the
      ------------------------
Trust Collateral Agent, and the Parent, dated as of December 1, 1999.

     "PBGC" means the Pension Benefit Guaranty Corporation or any successor
      ----
agency, corporation or instrumentality of the United States to which the duties
and powers of the Pension Benefit Guaranty Corporation are transferred.

     "Person" means an individual, a partnership, a corporation, a limited
      ------
liability company, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture, a Governmental Authority or other
entity of whatever nature.

     "Placement Agent" means Rothschild Inc.
      ---------------

     "Placement Agent Agreement" means the Placement Agent Agreement dated as of
      -------------------------
December 1, 1999, among the Issuer, TFC, TFCRC and the Placement Agent.

     "Placement Agent Information" means the information relating to the
      ---------------------------
Placement Agent in the Private Placement Memorandum.

                                       8
<PAGE>

     "Plan" means any pension plan (other than a Multiemployer Plan) covered by
      ----
Title IV of ERISA, which is maintained by a Commonly Controlled Entity or in
respect of which a Commonly Controlled Entity has liability.

     "Policy" has the meaning assigned to such term in the Preliminary
      ------
Statements above.

     "Premium" means the premium payable by the Issuer pursuant to the Premium
      -------
Letter.

     "Premium Letter" means the letter agreement between AGIC, TFC and the
      --------------
Issuer, dated as of the Closing Date, setting forth the payment arrangement for
the premiums in respect of the Policy, and certain other fees, related expenses
and other related matters.

     "Premium Rate" has the meaning assigned to such term in the Premium Letter.
      ------------

     "Prime Rate" means the fluctuating rate of interest as published from time
      ----------
to time in the New York, New York edition of The Wall Street Journal, under the
                                             -----------------------
caption "Money Rates" as the "prime rate", the "Prime Rate" to change when and
as such published prime rate changes.

     "Private Placement Memorandum" means the final Private Placement Memorandum
      ----------------------------
dated December 1, 1999, relating to the offering of the Notes.

     "Provided Documents" means the Transaction Documents and any documents,
      ------------------
agreements, instruments, schedules, certificates, statements, cash flow
schedules, number runs or other writings or data furnished to AGIC by or on
behalf of TFC, the Parent or TFCRC with respect to itself, its respective
Subsidiaries, the Receivables or the Transaction.

     "Purchaser" has the meaning assigned to such term in the Preliminary
      ---------
Statements above.

     "Purchase Agreement" means the Purchase Agreement between TFC, as seller,
      ------------------
and TFCRC, as purchaser, dated as of December 1, 1999.

     "Rating Agency" means Standard & Poor's Rating Services, a division of
      -------------
McGraw-Hill Companies, Inc.

     "Receivable" has the meaning provided in the Sale and Servicing Agreement.
      ----------

     "Reportable Event" means any of the events set forth in Section 4043(b) of
      ----------------
ERISA or the regulations thereunder.

     "Restrictions on Transferability" means, as applied to the property or
      -------------------------------
assets (or the income or profits therefrom) of any Person, in each case whether
the same is consensual or non-consensual or arises by contract, operation of
law, legal process or otherwise, any material condition to, or restriction on,
the ability of such Person or any transferee therefrom to sell, assign, transfer
or otherwise liquidate such property or assets in a commercially reasonable time
and manner or which would otherwise materially deprive such Person or any
transferee therefrom of the benefits of ownership of such property or assets.

                                       9
<PAGE>

     "Requisite Amount" means (a) on the Closing Date, the Initial Spread
      ----------------
Account Deposit Amount and (b) with respect to any Determination Date
thereafter, (i) if no Trigger Event or Insurance Agreement Event of Default
shall have occurred, the lesser of (A) the Initial Spread Account Deposit Amount
and (B) an amount equal to the Note Principal Balance, (ii) after the occurrence
of a Trigger Event, the lesser of (A) an amount equal to 6.00% of the Original
Pool Balance and (B) an amount equal to the Note Principal Balance; provided,
                                                                    --------
however, that, in the event such Trigger Event has been Deemed Cured, an amount
-------
equal to the amount calculated for such Determination Date pursuant to clause
(i) above, and (iii) notwithstanding anything in clauses (i) and (ii) above to
the contrary, after the occurrence of an Insurance Agreement Event of Default,
an amount equal to the Note Principal Balance.

     "Sale and Servicing Agreement" has the meaning assigned to such term in the
      ----------------------------
Preliminary Statements above.

     "Schedule of Receivables" means the schedule of receivables delivered to
      -----------------------
the Trust Collateral Agent by the Issuer in connection with the Sale and
Servicing Agreement.

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

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

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

     "Servicer" has the meaning assigned to such term in the Preliminary
      --------
Statements above.

     "Standby Remittance and Processing Agreement" means the Standby Remittance
      -------------------------------------------
and Processing Agreement among TFCRC, TFC, General Electric Capital Corporation,
AGIC, the Trust Collateral Agent and Norwest as P.O. Box owner, dated as of
December 1, 1999.

     "Subordinated Debt" means a debt obligation of TFC which is subordinated to
      -----------------
obligations owed to GE Capital as lender under the GE Capital Agreement,
pursuant to a subordination agreement which is in the form of Exhibit 16 to the
GE Capital Agreement or pursuant to some other agreement approved by GE Capital
and the Insurer.

     "Subsidiary" means, with respect to any Person, any corporation of which a
      ----------
majority of the outstanding shares of capital stock having ordinary voting power
for the election of directors is at the time owned by such Person directly or
through one or more Subsidiaries.

     "Tangible Net Worth" means, with respect to TFC, the excess of (a) the
      ------------------
tangible assets of TFC and all of its consolidated subsidiaries calculated in
accordance with GAAP, as reduced by adequate reserves in each case where
reserves are proper, over (b) all Indebtedness (excluding Subordinated Debt) of
TFC and all of its consolidated subsidiaries; provided, however, that (i)
                                              --------  -------

                                      10
<PAGE>

in no event shall there be included in the above calculation any intangible
assets such as patents, trademarks, trade names, copyrights, licenses, goodwill,
organizational costs, advances or loans to, or receivables from, directors,
shareholders, officers, employees or subsidiaries, amounts relating to covenants
not to compete, pension assets or treasury stock or any securities of TFC or of
any Affiliate of TFC, or any other securities unless the same are readily
marketable in the United States of America or entitled to be used as a credit
against federal income tax liabilities, (ii) securities included as such
intangible assets shall be taken into account at their current market price or
cost, whichever is lower, and (iii) any write-up in the book value of any assets
shall not be taken into account.

     "TFC" has the meaning assigned to such term in the Preliminary Statements
      ---
above.

     "Transaction" means the transactions contemplated by the Transaction
      -----------
Documents, including the transactions described in the Offering Documents.

     "Trigger Event" means the occurrence of any of the following events, the
      -------------
occurrence of which shall not have been waived in writing by AGIC:  (a) the
occurrence of a Delinquency Test Failure, or (b) the occurrence of a Cumulative
Net Loss Test Failure.

     "Trust Agreement" is the Amended and Restated Trust Agreement, dated as of
      ---------------
December 1, 1999 between TFCRC and Wilmington Trust Company as owner trustee.

     "Trust Collateral Agent" has the meaning assigned to such term in the
      ----------------------
Preliminary Statements above.

     "Trustee" has the meaning assigned to such term in the Preliminary
      -------
Statements above.

     "Trust Property" has the meaning assigned to such term in the Preliminary
      --------------
Statements above.

     "Year 2000 Problem" means the risk that computer applications used by a
      -----------------
Person  (or suppliers, vendors and customers of such Person) may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999.

     Section 1.02.  Generic Terms.  All words used herein shall be construed to
                    -------------
be of such gender or number as the circumstances require.  The words "herein,"
"hereby," "hereof," "hereto," "hereinbefore" and "hereinafter," and words of
similar import, refer to this Insurance Agreement in its entirety and not to any
particular paragraph, clause or other subdivision, unless otherwise specified.

     Section 1.03.  Computation of Time Periods.  In this Insurance Agreement in
                    ---------------------------
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each means "to and including".  Periods of days referred to in this Insurance
Agreement shall be counted in calendar days unless Business Days are expressly
prescribed and references in this Insurance Agreement to months and years shall
be to calendar months and calendar years unless otherwise specified.

                                       11
<PAGE>

                                  ARTICLE II

                         THE POLICY AND REIMBURSEMENT

     Section 2.01.  Policy.  AGIC agrees, subject to the satisfaction or waiver
                    ------
of the conditions hereinafter set forth on or prior to the Closing Date, to
issue the Policy on the Closing Date.

     Section 2.02.  Conditions Precedent.  The obligation of AGIC to issue the
                    --------------------
Policy is subject to the satisfaction of the following conditions on or prior to
the Closing Date:

          (a)  The following documents shall have been duly authorized, executed
     and delivered by each of the parties thereto (other than AGIC) and shall be
     in full force and effect and in form and substance satisfactory to AGIC, in
     the exercise of AGIC's sole discretion, and an executed counterpart of each
     thereof shall have been delivered to AGIC:

          (i)     this Insurance Agreement;

          (ii)    the Indenture;

          (iii)   the Sale and Servicing Agreement, including the Schedule of
                  Receivables;

          (iv)    the Purchase Agreement, including the Schedule of Receivables;

          (v)     the Placement Agent Agreement;

          (vi)    the Indemnification Agreement;

          (vii)   the Standby Remittance and Processing Agreement;

          (viii)  the Trust Agreement;

          (ix)    the Parent Support Agreement;

          (x)     the Securities Account Control Agreement;

          (xi)    the Premium Letter; and

          (xii)   the Fort Knox Letters.

(items (i) through (xii) being, collectively, the "Transaction Documents").

          (b)  AGIC shall have received:

          (i)     copies certified by the Secretary or an Assistant Secretary of
                  each of the Parent, the Issuer, TFC and TFCRC, dated the
                  Closing Date, of its certificate of incorporation and by-laws
                  and the resolutions of its Board of Directors, as the case may
                  be, or a duly authorized committee thereof

                                       12
<PAGE>

                  authorizing its execution and delivery of the Basic Documents
                  and of all documents evidencing other corporate or company
                  action and governmental approvals, if any, that are necessary
                  for the consummation of the transactions contemplated in such
                  documents;

          (ii)    a certificate, dated the Closing Date, of the secretary or an
                  assistant secretary of each of the Parent, the Issuer, TFCRC,
                  the Trustee, the Owner Trustee, the Back-up Servicer and TFC
                  certifying the names and true signatures of its officers
                  authorized to sign such Basic Documents to which it is a
                  party;

          (iii)   a certificate, dated the Closing Date, of a Chief Financial
                  Officer, a Treasurer, an Assistant Treasurer or Vice President
                  of each of the Issuer, TFCRC and TFC certifying to the effect
                  of the representation and warranty set forth in Section
                  3.01(e) hereof;

          (iv)    each of the opinions, letters and certificates described in
                  the closing checklist attached hereto as Exhibit B (other than
                  any such opinion, letter or certificate required to be issued
                  or delivered by AGIC or an agent or employee thereof), in each
                  case (1) dated the Closing Date, (2) in full force and effect
                  at the time of delivery thereof, (3) in form and substance
                  satisfactory to AGIC in the exercise of its sole discretion,
                  and (4) covering such matters as AGIC shall require in the
                  exercise of its sole discretion;

          (v)     evidence that one or more UCC financing statements covering
                  the security interest of the Trust Collateral Agent created by
                  or pursuant to the Indenture in the Trust Property and the
                  other property and rights which the Trustee is granted in the
                  Indenture and the proceeds thereof has been executed by the
                  Issuer in favor of the Trust Collateral Agent, and has been
                  duly filed in such place or places which, in the opinion of
                  counsel for the Issuer, TFC and AGIC, are necessary or
                  desirable to perfect such interest;

          (vi)    evidence that one or more UCC financing statements covering
                  the interest of TFCRC in the Receivables and the other related
                  assets assigned pursuant to the Purchase Agreement has been
                  executed by TFC in favor of TFCRC, and has been duly filed in
                  such place or places which, in the opinion of counsel for the
                  Issuer, TFC and AGIC, are necessary or desirable to perfect
                  such interest;

          (vii)   evidence that one or more UCC financing statements covering
                  the interest of the Issuer in the Receivables and the other
                  related assets assigned pursuant to the Sale and Servicing
                  Agreement has been executed by TFCRC in favor of the Issuer,
                  and assigned to the Trust Collateral Agent, and has been duly
                  filed in such place or places which, in the opinion of counsel
                  for the Issuer, TFC and AGIC, are necessary or desirable to
                  perfect such interest;

                                       13
<PAGE>

          (viii)  evidence that each of the Collection Account, the Spread
                  Account, and the Note Payment Account have been established in
                  accordance with the terms and conditions of the Indenture and
                  the Sale and Servicing Agreement;

          (ix)    certified copies of documents, certificates, instruments,
                  approvals or executed copies thereof that relate to the
                  transactions as contemplated by the Basic Documents as AGIC
                  may reasonably request;

          (x)     a specimen Note; and

          (xi)    a statement, in form and substance satisfactory to AGIC,
                  reviewing the results of the Independent Accountants'
                  performance of certain agreed upon procedures with respect to
                  TFC, its reporting and record keeping, and the characteristics
                  of the Receivables as of the Cut-Off Date, by way of
                  independent verification of (x) information provided by TFC
                  for inclusion in the Offering Document and (y) certain cash
                  flow models supplied to AGIC by the Placement Agent in advance
                  of the Closing Date (the full costs of which statement shall
                  have been paid on or before the Closing Date by or on behalf
                  of TFC).

          (c) (i) No statute, rule, regulation or order shall have been
     enacted, entered or deemed applicable by any government or governmental or
     administrative agency or court which would make the transactions
     contemplated by the Transaction Documents illegal or otherwise prevent the
     consummation thereof, (ii)  no material omission or change of fact shall
     have occurred or come to the attention of any of TFC, TFCRC, the Issuer,
     the Parent, the Trustee, the Placement Agent or AGIC that would cause
     information or documents heretofore supplied to AGIC to be untrue or
     misleading, (iii)  no other material change or omission shall have occurred
     or come to the attention of any of TFC, TFCRC, the Issuer, the Parent, the
     Trustee, the Placement Agent or AGIC that would entitle the Placement Agent
     to decline to place the Notes, and (iv)  no Material Adverse Change shall
     have occurred in the security for the Notes since the date of the Purchase
     Agreement.

          (d)  No suit, action or other proceeding, investigation, or injunction
     or final judgment relating thereto, shall be threatened or pending before
     any court or governmental agency in which it is sought to restrain or
     prohibit or obtain damages or other relief in connection with the
     consummation of the Transactions, and no investigation that might result in
     any such suit, action or proceeding shall be pending or threatened.

          (e)  AGIC shall have received an executed copy of all legal opinions,
     certificates, accountant's reports and other documents required to be
     furnished by the Issuer, the Servicer, the Back-up Servicer, the Trustee,
     TFCRC, the Parent and TFC pursuant to any of the Transaction Documents or
     pursuant to the requirements of the Rating Agency (if any).  Such documents
     shall be in form and substance satisfactory to AGIC in the

                                       14
<PAGE>

     exercise of its sole discretion and each such legal opinion or certificate
     shall be addressed to AGIC, or accompanied by appropriate reliance letters
     to AGIC.

          (f)  There shall be on deposit in the Spread Account a sum of not less
     than $2,606,028 in immediately available funds.

          (g)  Simultaneously with the issuance of the Policy, the Notes shall
     have been duly executed and authenticated and delivered to the relevant
     Noteholders pursuant to the Indenture.

          (h)  All fees and expenses payable hereunder or pursuant to the
     Premium Letter to AGIC on or prior to the Closing Date shall have been paid
     in full by TFC or the Issuer.

          (i)  AGIC shall have received confirmation that the risk secured by
     the Policy constitutes at least "BBB-" by S&P and that the Notes, when
     issued, will be rated "AA" by S&P.

          (j)  No Trigger Event, Event of Default, Servicer Termination Event,
     Default or Insurance Agreement Event of Default shall have occurred.

     Section 2.03.  Premium Letter.  AGIC shall be entitled to receive the
                    --------------
Premium payable under the Premium Letter on each Payment Date, and the timely
payment or other performance of all other obligations set forth in the Premium
Letter, in each case in accordance with the terms and conditions of the Premium
Letter.

     Section 2.04.  Reimbursement Obligations.  (a)  In consideration of the
                    -------------------------
issuance of the Policy by AGIC, AGIC shall be entitled to reimbursement by the
Issuer from the Trust Property, pursuant to the terms hereof, the Indenture and
the Sale and Servicing Agreement, for any payment made under the Policy, which
reimbursement shall be due and payable to AGIC on the date that any amount is to
be paid pursuant to a Notice for Payment (as defined in the Policy).  Such
reimbursement shall be made in accordance with the terms hereof and of the
Indenture, in an amount equal to the sum of all amounts paid or previously paid
that remain unpaid under the Policy, together with interest on any and all
amounts remaining unpaid (to the extent permitted by law, if in respect of any
unpaid amounts representing interest) from the date such amounts became due
until paid in full (after as well as before judgment), at a rate of interest
equal to the Prime Rate from time to time in effect plus 2.0%.

          (b)  Anything in Section 2.04(a) to the contrary notwithstanding, AGIC
     shall be entitled to reimbursement (to the extent such reimbursement and
     related interest has not previously been paid by payment to AGIC from the
     Trust Property) from (i) the Issuer, for payments made under the Policy
     arising as a result of the Issuer's failure to make any payment or deposit
     with respect to a Receivable required to be made pursuant to Section 3.2 of
     the Sale and Servicing Agreement, together with interest on any and all
     such amounts remaining unpaid (to the extent permitted by law, if in
     respect of any unpaid amounts representing interest) from the date such
     amounts became due until paid in full (after as well as before judgment),
     at a rate of interest equal to the Prime Rate from time to time in effect
     plus 2.0%, and (ii) the Servicer, for payments made under the Policy
     arising as a result of the Servicer's failure to make any deposit,
     including without

                                       15
<PAGE>

     limitation, a deposit required to be made pursuant to Section 4.7 of the
     Sale and Servicing Agreement, together with interest on any and all such
     amounts remaining unpaid (to the extent permitted by law, if in respect of
     any unpaid amounts representing interest) from the date such amounts became
     due until paid in full (after as well as before judgment), at a rate of
     interest equal to the Prime Rate from time to time in effect plus 2.0%.

          (c)  Interest payable to AGIC under this Insurance Agreement shall be
     calculated on the basis of a 360-day year for the actual number of days
     elapsed and with respect to amounts payable pursuant to Sections 2.03 or
     2.04(a) or (b) shall be payable in accordance with the Indenture and the
     Sale and Servicing Agreement, or to the extent payable pursuant to any
     other section herein, on demand.

     Section 2.05.  Assignment and Other Rights upon Payments under the Policy.
                    ----------------------------------------------------------
(a)  In consideration of the issuance of the Policy by AGIC, in the case of any
payment made by or on behalf of AGIC under the Policy, in addition to and not by
way of limitation of, any of the rights and remedies of AGIC hereunder or under
the Indenture with respect to such payment, each of the Issuer, TFCRC and TFC
hereby acknowledges and consents to the assignment by the Trustee, on behalf of
the Noteholders, to AGIC in accordance with the terms of the relevant Notice for
Payment (as such term is defined in the Policy):

               (i)  the rights of the Noteholders with respect to the Notes and
                    the Trust Property, to the extent of any such payment under
                    the Policy; and

               (ii) the rights of the Trustee and each Noteholder in the conduct
                    of any Insolvency Proceeding relating to any Preference
                    Event (as such terms are defined in the Policy), including,
                    without limitation, all rights of any party to an adversary
                    proceeding or action with respect to any court order issued
                    in connection with any such Insolvency Proceeding.

          (b)  The rights and remedies of AGIC described in clause (a) above are
     in addition to, and not in limitation of, rights of subrogation and other
     rights and remedies otherwise available to AGIC in respect of payments
     under the Policy.  The Trustee shall take such action and deliver such
     instruments as may be reasonably requested or required by AGIC to
     effectuate the purpose or provisions of this Section 2.05.

     Section 2.06.  Subrogation; Further Assurances.  (a)  The interests, rights
                    -------------------------------
and remedies of AGIC described in Article II above are in addition to, and not
in lieu of, AGIC's equitable rights of subrogation, and AGIC reserves all of
such rights. Each of the Issuer, TFCRC and TFC agrees to take, or cause to be
taken, all actions deemed desirable by AGIC to preserve, enforce, perfect or
maintain the perfection in AGIC's favor of such interests, rights and remedies
and such equitable rights of subrogation.

          (b)  For the avoidance of doubt, the parties hereto acknowledge and
     agree that the receipt of any payment under the Policy shall not constitute
     (x) a reduction of any unpaid amounts of principal or interest of Notes
     outstanding under the Indenture or (y) otherwise discharge any other
     obligations whatsoever of the Issuer under the Indenture.

                                       16
<PAGE>

          (c)  Each of the Issuer, TFCRC and TFC agrees to promptly and duly
     take, execute, acknowledge and deliver such further acts, documents,
     instruments and assurances as AGIC may from time to time reasonably request
     to more effectively evidence any rights to assignment or subrogation under
     this Article II, and to protect and perfect all of AGIC's other rights as
     against the Issuer, as the case may be.

     Section 2.07  Indemnification by TFC; Conduct of Actions or Proceedings;
Contribution.

          (a)  In addition to any and all rights of reimbursement,
     indemnification, subrogation and any other rights pursuant hereto or under
     law or in equity, TFC agrees to pay, and to protect, indemnify and save
     harmless, AGIC and its officers, directors, shareholders, employees, agents
     and each Person, if any, who controls AGIC within the meaning of either
     Section 15 of the Securities Act or Section 20 of the Securities Exchange
     Act (individually, an "Indemnified Party" and, collectively, the
     "Indemnified Parties"), from and against any and all claims, losses,
     liabilities (including penalties), actions, suits, judgments, demands,
     damages, costs or expenses (including, without limitation, reasonable fees
     and expenses of attorneys, consultants and auditors and reasonable costs of
     investigations) of any nature arising out of or relating to the
     transactions contemplated by the Transaction Documents by reason of:

          (i)    the negligence, bad faith, willful misconduct, misfeasance,
                 malfeasance or theft committed by any director, officer,
                 employee or agent of the Issuer, TFC, the Servicer, the Parent,
                 TFCRC, the Seller, as the case may be; or

          (ii)   the breach by the Issuer, TFC, the Servicer, the Parent, TFCRC,
                 or the Seller of any representation, warranty or covenant under
                 any of the Transaction Documents, or the occurrence, in respect
                 of the Issuer, TFC, the Servicer, the Parent, TFCRC, or the
                 Seller, under any of the Transaction Documents of any
                 "default," "event of default" or any event which, with the
                 giving of notice or the lapse of time or both, would constitute
                 any "event of default"; provided, however, it is understood and
                                         --------  -------
                 agreed that the sole remedy with respect to a breach of
                 representations and warranties pursuant to Section 3.1 of the
                 Sale and Servicing Agreement shall be the repurchase of
                 Receivables pursuant to Section 3.2 of the Sale and Servicing
                 Agreement, subject to the conditions contained therein, or to
                 enforce the obligation of TFC to TFCRC to repurchase such
                 Receivables pursuant to the Purchase Agreement; provided,
                                                                 --------
                 further, it is understood and agreed that the sole remedy with
                 -------
                 respect to the breach of any of the covenants set forth in
                 Sections 4.5(a) or 4.6(a) of the Sale and Servicing Agreement
                 shall be the purchase of Receivables pursuant to Section 4.7 of
                 the Sale and Servicing Agreement, subject to the conditions
                 contained therein; provided further, however, that TFC shall
                                    ----------------  ------
                 indemnify AGIC (and its respective directors, officers,
                 employees and agents) against all costs, expenses, losses,
                 damages, claims and liabilities, including reasonable fees and
                 expenses of counsel, which may be asserted against or incurred
                 by it

                                       17
<PAGE>

                 as a result of third party claims arising out of the events or
                 facts giving rise to any such breach of such covenant.

          (b)  If any action or proceeding (including any governmental
     investigation) shall be brought or asserted against the Indemnified Parties
     in respect of which indemnity may be sought from TFC hereunder, AGIC shall
     promptly notify TFC in writing, and TFC shall assume the defense thereof,
     including the employment of counsel satisfactory to AGIC and the payment of
     all reasonable expenses. An Indemnified Party shall have the right to
     employ separate counsel in any such action and to participate in the
     defense thereof at the expense of the Indemnified Party; provided, however,
                                                              --------  -------
     that the fees and expenses of such separate counsel shall be at the expense
     of TFC if (i) TFC has agreed to pay such fees and expenses, (ii) TFC shall
     have failed to assume the defense of such action or proceeding and employ
     counsel satisfactory to AGIC in any such action or proceeding or (iii) the
     named parties to any such action or proceeding (including any impleaded
     parties) include both the Indemnified Party and TFC, and the Indemnified
     Party shall have been advised by counsel that (A) there may be one or more
     legal defenses available to it which are different from or additional to
     those available to TFC and (B) the representation of TFC and the
     Indemnified Party by the same counsel would be inappropriate or contrary to
     prudent practice (in which case, if the Indemnified Party notifies TFC in
     writing that it elects to employ separate counsel at the expense of TFC,
     TFC shall not have the right to assume the defense of such action or
     proceeding on behalf of such Indemnified Party, it being understood,
     however, that TFC shall not, in connection with any one such action or
     proceeding or separate but substantially similar or related actions or
     proceedings in the same jurisdiction arising out of the same general
     allegations or circumstances, be liable for the reasonable fees and
     expenses of more than one separate firm of attorneys at any time for the
     Indemnified Parties, which firm shall be designated in writing by AGIC).
     TFC shall not be liable for any settlement of any such action or proceeding
     effected without its written consent to the extent that any such settlement
     shall be prejudicial to TFC, but, if settled with its written consent, or
     if there be a final judgment for the plaintiff in any such action or
     proceeding with respect to which TFC shall have received notice in
     accordance with this subsection (b), TFC agrees to indemnify and hold the
     Indemnified Parties harmless from and against any loss or liability by
     reason of such settlement or judgment.

          (c)  To provide for just and equitable contribution, if the
     indemnification provided by TFC is determined to be unavailable for any
     Indemnified Party (other than due to application of this Section), TFC
     shall contribute to the losses incurred by the Indemnified Party on the
     basis of the relative fault of TFC, on the one hand, and the Indemnified
     Party, on the other hand.

     Section 2.08  Indemnification by TFCRC; Conduct of Actions or Proceedings;
Contribution.

          (a)  In addition to any and all rights of reimbursement,
     indemnification, subrogation and any other rights pursuant hereto or under
     law or in equity TFCRC agrees to pay, and to protect, indemnify and save
     harmless the Indemnified Parties, from and against any and all claims,
     losses, liabilities (including penalties), actions, suits,

                                       18
<PAGE>

     judgments, demands, damages, costs or expenses (including, without
     limitation, reasonable fees and expenses of attorneys, consultants and
     auditors and reasonable costs of investigations) of any nature arising out
     of or relating to the transactions contemplated by the Transaction
     Documents by reason of:

          (i)    the negligence, bad faith, willful misconduct, misfeasance,
                 malfeasance or theft committed by any director, officer,
                 employee or agent of TFCRC; or

          (ii)   the breach by TFCRC of any representation, warranty or covenant
                 under any of the Transaction Documents, or the occurrence, in
                 respect of TFCRC, under any of the Transaction Documents of any
                 "default," "event of default" or any event which, with the
                 giving of notice or the lapse of time or both, would constitute
                 any "event of default"; provided, however, it is understood and
                                         --------  -------
                 agreed that the sole remedy with respect to a breach of
                 representations and warranties pursuant to Section 3.1 of the
                 Sale and Servicing Agreement shall be the repurchase of
                 Receivables pursuant to Section 3.2 of the Sale and Servicing
                 Agreement, subject to the conditions contained therein, or to
                 enforce the obligation of TFC to repurchase such Receivables
                 pursuant to the Purchase Agreement;

          (b)  If any action or proceeding (including any governmental
     investigation) shall be brought or asserted against the Indemnified Parties
     in respect of which indemnity may be sought from TFCRC hereunder, AGIC
     shall promptly notify TFCRC in writing, and TFCRC shall assume the defense
     thereof, including the employment of counsel satisfactory to AGIC and the
     payment of all reasonable expenses. An Indemnified Party shall have the
     right to employ separate counsel in any such action and to participate in
     the defense thereof at the expense of the Indemnified Party; provided,
                                                                  --------
     however, that the fees and expenses of such separate counsel shall be at
     -------
     the expense of TFCRC if (i) TFCRC has agreed to pay such fees and expenses,
     (ii) TFCRC shall have failed to assume the defense of such action or
     proceeding and employ counsel satisfactory to AGIC in any such action or
     proceeding or (iii) the named parties to any such action or proceeding
     (including any impleaded parties) include both the Indemnified Party and
     TFCRC, and the Indemnified Party shall have been advised by counsel that
     (A) there may be one or more legal defenses available to it which are
     different from or additional to those available to TFCRC and (B) the
     representation of TFCRC and the Indemnified Party by the same counsel would
     be inappropriate or contrary to prudent practice (in which case, if the
     Indemnified Party notifies TFCRC in writing that it elects to employ
     separate counsel at the expense of TFCRC, TFCRC shall not have the right to
     assume the defense of such action or proceeding on behalf of such
     Indemnified Party, it being understood, however, that TFCRC shall not, in
     connection with any one such action or proceeding or separate but
     substantially similar or related actions or proceedings in the same
     jurisdiction arising out of the same general allegations or circumstances,
     be liable for the reasonable fees and expenses of more than one separate
     firm of attorneys at any time for the Indemnified Parties, which firm shall
     be designated in writing by AGIC). TFCRC shall not be liable for any
     settlement of any such action or proceeding effected without its written
     consent to the extent that any such settlement shall be prejudicial to
     TFCRC, but, if settled with its

                                       19
<PAGE>

     written consent, or if there be a final judgment for the plaintiff in any
     such action or proceeding with respect to which TFCRC shall have received
     notice in accordance with this subsection (b), TFCRC agrees to indemnify
     and hold the Indemnified Parties harmless from and against any loss or
     liability by reason of such settlement or judgment.

          (c)  To provide for just and equitable contribution, if the
     indemnification provided by TFCRC is determined to be unavailable for any
     Indemnified Party (other than due to application of this Section), TFCRC
     shall contribute to the losses incurred by the Indemnified Party on the
     basis of the relative fault of TFCRC, on the one hand, and the Indemnified
     Party, on the other hand.

                                  ARTICLE III

                        REPRESENTATIONS AND WARRANTIES

     Section 3.01.  Representations and Warranties with respect to TFC and
                    ------------------------------------------------------
TFCRC.  Each of TFC and TFCRC represents and warrants, as of the Closing Date,
-----
with respect to TFC and TFCRC, that:

          (a)  Due Organization and Qualification.  (i) TFC is a corporation,
               ----------------------------------
     duly organized, validly existing and in good standing under the laws of
     Virginia.  TFC is duly qualified to do business, is in good standing and
     has obtained all necessary licenses, permits, charters, registrations and
     approvals (together, "approvals") necessary for the conduct of its business
     as currently conducted and as described in the Offering Document and the
     performance of its obligations under the Transaction Documents, in each
     jurisdiction in which the failure to be so qualified or to obtain such
     approvals might result in a Material Adverse Change.  (ii) TFCRC is a
     corporation duly organized, validly existing and in good standing under the
     laws of Delaware.  With the exception of becoming qualified to do business
     under the laws of Virginia, TFCRC is duly qualified to do business, is in
     good standing and has obtained all necessary licenses, permits, charters,
     registrations and approvals (together, "approvals") necessary for the
     conduct of its business as currently conducted and as described in the
     Offering Document and the performance of its obligations under the
     Transaction Documents, in each jurisdiction in which the failure to be so
     qualified or to obtain such approvals might result in a Material Adverse
     Change.

          (b)  Power and Authority.  Each of TFC and TFCRC has all necessary
               -------------------
     corporate power and authority to conduct its business as currently
     conducted and as described in the Offering Document, to execute, deliver
     and perform its obligations under the Transaction Documents and has full
     power and authority to sell and assign the Receivables as contemplated by
     the Transaction Documents and to consummate the Transaction.

          (c)  Due Authorization.  The execution, delivery and performance of
               -----------------
     the Transaction Documents by each of TFC and TFCRC has been duly authorized
     by all necessary corporate action and does not require any additional
     approvals or consents or other action by, or any notice to, or filing with,
     any Person, including, without limitation, any governmental entity or any
     of its stockholders.

                                       20
<PAGE>

          (d)  Noncontravention.  None of the execution and delivery of the
               ----------------
     Transaction Documents by TFC or TFCRC, the consummation of the transactions
     contemplated thereby nor the satisfaction of the terms and conditions of
     the Transaction Documents,

          (i)    conflicts with or results in any material breach or violation
                 of any provision of the Certificate of Incorporation or Bylaws
                 of TFC or TFCRC, as the case may be, or any law, rule,
                 regulation, order, writ, judgment, injunction, decree,
                 determination or award currently in effect having applicability
                 to TFC or TFCRC, as the case may be, or any of their respective
                 properties, including regulations issued by an administrative
                 agency or other governmental authority having supervisory
                 powers over TFC or TFCRC, as the case may be,

          (ii)   constitutes or will constitute a default by TFC or TFCRC, as
                 the case may be, under or a material breach of any provision of
                 any loan agreement, mortgage, indenture or other agreement or
                 instrument to which TFC or TFCRC is a party or by which it, or
                 any of its or their properties is, or may be, bound or
                 affected, or

          (iii)  results in or requires the creation of any Lien upon or in
                 respect of any of the assets of TFC or TFCRC except as
                 otherwise expressly contemplated by the Transaction Documents.

          (e)  Legal Proceedings. Other than as stated in the Private
               -----------------
     Placement Memorandum, there is no action, proceeding or investigation
     pending, or to the best knowledge of TFC or TFCRC after reasonable inquiry,
     threatened by or before any court, regulatory body, governmental or
     administrative agency or arbitrator against or affecting TFC or TFCRC, or
     any properties or rights of TFC or TFCRC, including without limitation, the
     Receivables, which might result in a Material Adverse Change with respect
     to TFC or TFCRC.

          (f)  Valid and Binding Obligations.  Each of the Transaction Documents
               -----------------------------
     to which either TFC or TFCRC is a party when executed and delivered by TFC
     or TFCRC, as the case may be, will constitute the legal, valid and binding
     obligations of such Person, enforceable in accordance with their respective
     terms, except as such enforceability may be limited by bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting
     creditors' rights generally and general equitable principles. The
     Certificate, when executed, authenticated and delivered in accordance with
     the Trust Agreement, will be validly issued and outstanding and entitled to
     the benefits of the Trust Agreement and will evidence the entire beneficial
     ownership interest in the Issuer. The Notes when executed, authenticated
     and delivered in accordance with the Indenture, will be entitled to the
     benefits of the Indenture and will constitute legal, valid and binding
     obligations of the Issuer, enforceable in accordance with their terms,
     except as limited by applicable bankruptcy, insolvency, reorganization,
     moratorium and similar laws affecting the enforcement of creditors' rights
     generally or general equitable principles (whether in a proceeding at law
     or in equity) and except to the extent that rights to indemnity and
     contribution may be limited by public policy.

                                       21
<PAGE>

          (g)  ERISA.  Each of TFC and TFCRC is in compliance with ERISA and has
               -----
     not incurred and does not reasonably expect to incur, any liabilities to
     the PBGC under ERISA in connection with any Plan or Multiemployer Plan.

          (h)  Accuracy of Information.  None of the Transaction Documents nor
               -----------------------
     any of the Provided Documents contain any statement of a material fact with
     respect to TFC or TFCRC or the Transaction that was untrue or misleading in
     any material respect when made.  Since the furnishing of the Provided
     Documents, there has been no change, nor any development or event involving
     a prospective change known to TFC or TFCRC, that would render any of the
     Provided Documents untrue or misleading in any material respect. There is
     no fact known to TFC or TFCRC which has a material possibility of causing a
     Material Adverse Change with respect to either of TFC or TFCRC, or which
     has a material possibility of impairing the value or marketability of the
     Receivables, taken as a whole, or decreasing the possibility that amounts
     due in respect of the Receivables will be collected as due.

          (i)  Compliance With Securities Laws.  The Notes have not been offered
               -------------------------------
     or sold in any manner that would render the issuance and sale of the Notes
     a violation of the Securities Act or any state securities or "Blue Sky"
     laws or require registration pursuant thereto, nor has any Person been
     authorized to act in such manner.  No registration under the Securities Act
     is required for the sale of the Notes as contemplated by the Transaction
     Documents, assuming the accuracy of the Purchaser's representations and
     warranties set forth in the Purchase Agreement, and satisfaction by the
     Placement Agent of its obligations set forth in the Placement Agency
     Agreement.  Without limitation of the foregoing, the Offering Document does
     not contain any untrue statement of a material fact and does not omit to
     state a material fact required to be stated therein or necessary to make
     the statements made therein, in light of the circumstances under which they
     were made, not misleading.

          (j)  Transaction Documents.  Each of the representations and
               ---------------------
     warranties of TFC or TFCRC contained in the Transaction Documents is true
     and correct in all material respects and each of TFC or TFCRC hereby makes
     each such representation and warranty made by it to, and for the benefit
     of, AGIC as if the same were set forth in full herein.

          (k)  No Consents.  No consent, license, approval or authorization
               -----------
     from, or registration, filing or declaration with, any regulatory body,
     administrative agency, or other governmental instrumentality, nor any
     consent, approval, waiver or notification of any creditor, lessor or other
     nongovernmental person, is required in connection with the execution,
     delivery and performance by TFC or TFCRC of this Insurance Agreement or of
     any other Transaction Document to which such Person is a party, except (in
     each case) as have been obtained and are in full force and effect.

          (l)  Compliance With Law. Etc.  No practice, procedure or policy
               -------------------------
     employed or proposed to be employed by TFC or TFCRC in the conduct of their
     respective businesses violates any law, regulation, judgment, agreement,
     order or decree applicable to it which, if enforced, would result in a
     Material Adverse Change with respect to such Person.

                                       22
<PAGE>

          (m)    Special Purpose Entity.
                 ----------------------

          (i)    The capital of TFCRC is adequate for the business and
                 undertakings of TFCRC.

          (ii)   Other than with respect to the purchase by TFC of the stock of
                 TFCRC, and as provided in this Insurance Agreement and the
                 Transaction Documents, TFCRC is not engaged in any business
                 transactions with TFC.

          (iii)  At least two directors of TFCRC shall be persons who are not,
                 and will not be, a director, officer, employee or holder of any
                 equity securities of TFC or any of its affiliates or
                 subsidiaries.

          (iv)   The funds and assets of TFCRC are not, and will not be,
                 commingled with the funds of any other person.

          (v)    The Bylaws of TFCRC require it to maintain (A) correct and
                 complete minute books and records of account, and (B) minutes
                 of the meetings and other proceedings of its shareholders and
                 board of directors.

          (n)  Solvency: Fraudulent Conveyance.  Each of TFC and TFCRC is
               -------------------------------
     solvent, is able to pay its debts as they become due and will not be
     rendered insolvent by the Transaction and, after giving effect to such
     Transaction, neither TFC nor TFCRC will be left with an unreasonably small
     amount of capital with which to engage in its business.  Neither TFC nor
     TFCRC intends to incur, or believes that it has incurred, debts beyond its
     ability to pay such debts as they mature. Neither TFC nor TFCRC
     contemplates the commencement of insolvency, bankruptcy, liquidation or
     consolidation proceedings or the appointment of a receiver, liquidator,
     conservator, trustee or similar official in respect of TFC or TFCRC, as the
     case may be, or any of their respective assets. The amount of consideration
     being received by TFCRC upon the sale of the Receivables to the Issuer
     constitutes reasonably equivalent value and fair consideration for the
     Receivables. TFCRC is not selling the Receivables to the Issuer, as
     provided in the Transaction Documents, with any intent to hinder, deal or
     defraud any of TFC's creditors.

          (o)  Good Title; Valid Transfer: Absence of Liens: Security Interest.
               ---------------------------------------------------------------

          (i)    Immediately prior to the pledge of the Collateral to the Trust
                 Collateral Agent pursuant to the Indenture, the Issuer was the
                 owner of, and had good and marketable title to, such property
                 free and clear of all Liens and Restrictions on
                 Transferability, and had or will have had full right, power and
                 lawful authority to assign, transfer and pledge such
                 Receivables. The Indenture constitutes a valid pledge of the
                 Collateral to the Trust Collateral Agent and the Trust
                 Collateral Agent shall have a valid and perfected first
                 priority security interest in the Collateral, free and clear of
                 all Liens and Restrictions on Transferability.

                                       23
<PAGE>

          (ii)   Immediately prior to the transfer of any Receivables to the
                 Issuer pursuant to the Sale and Servicing Agreement, TFCRC was
                 or will have been the owner of, and had good and marketable
                 title to, such property free and clear of all Liens and
                 Restrictions on Transferability, and had or will have had full
                 right, corporate power and lawful authority to assign, transfer
                 and pledge such Receivables. In the event that a transfer of
                 the Receivables by TFCRC to the Issuer is characterized as
                 other than a sale, such transfer shall be characterized as a
                 secured financing, and the Trustee shall have a valid and
                 perfected first priority security interest in such Receivables
                 free and clear of all Liens and Restrictions on
                 Transferability.

          (iii)  Immediately prior to the sale of the Receivables to TFCRC
                 pursuant to the Purchase Agreement, TFC was or will have been
                 the owner of, and had good and marketable title to, the
                 Receivables being transferred by such party free and clear of
                 all Liens and Restrictions on Transferability, and had or will
                 have had full right, corporate power and lawful authority to
                 assign, transfer and pledge such Receivables. In the event that
                 a transfer of the Receivables by TFC to TFCRC is characterized
                 as other than a sale, such transfer shall be characterized as a
                 secured financing, and TFCRC shall have a valid and perfected
                 first priority security interest in such Receivables free and
                 clear of all Liens and Restrictions on Transferability.

          (p)  Taxes. Each of TFC and TFCRC has (i) filed all tax returns which
               -----
are required to be filed in any jurisdiction and (ii) paid all taxes,
assessments, fees and other governmental charges against TFC or TFCRC or any of
the properties, income or franchise of TFC or TFCRC, to the extent that such
taxes have become due, other than any taxes or assessments, the validity of
which are being contested in good faith by appropriate proceedings and with
respect to which it has set aside adequate reserves on its books in accordance
with GAAP and which proceedings have not given rise to any Lien. To the best of
the knowledge of TFC and TFCRC, all such tax returns were true and correct in
all material respects and neither of TFC nor TFCRC knows of any proposed
material additional tax assessment against it nor any basis therefor. Any taxes,
assessments, fees and other governmental charges payable by TFC or TFCRC in
connection with the Transaction, the execution and delivery of the Transaction
Documents and the issuance of the Notes have been paid or shall have been paid
at or prior to Closing Date.

          (q)  Private Placement Memorandum.  As of the Closing Date, neither
               ----------------------------
     the Private Placement Memorandum nor any amendment thereof or supplement
     thereto (other than the AGIC Information and the Placement Agent
     Information) contain any untrue statement of a material fact or omit to
     state a material fact necessary in order to make the statements therein, in
     light of the circumstances under which they were made, not misleading.

          (r)  Year 2000 Compliance.
               --------------------

          (i)    TFC (A) initiated a review and assessment of all areas within
                 its business and operations that could be adversely affected by
                 the Year 2000 Problem

                                       24
<PAGE>

                 (including those affected by Dealers, suppliers, vendors and
                 subservicers, but only to the extent that the adverse effect on
                 such businesses and operations affected by Dealers, suppliers,
                 vendors and subservicers would be reasonably likely to
                 constitute a material adverse effect on the financial
                 conditions or operations of TFC or the collectibility of the
                 Receivables), (B) developed a plan and timeline for addressing
                 the Year 2000 Problem, (C) implemented the plan in accordance
                 with that timetable. Based on the foregoing, TFC believes that
                 all computer applications (including those of its Dealers,
                 suppliers, vendors, and subservicers) that are material to its
                 business and operations are reasonably expected to be able to
                 perform properly date-sensitive functions for dates before and
                 after January 1, 2000 (that is, be "Year 2000 Compliant"),
                                                     -------------------
                 except to the extent that a failure to do so could not
                 reasonably be expected to have material adverse effect, or to
                 result in (1) a Default under the Indenture, (2) an Event of
                 Default under the Indenture, (3) a Servicer Termination Event,
                 or (4) an event which, with the giving of notice or the passage
                 of time or both, would constitute a Servicer Termination Event,
                 (D) has completed a review and assessment of all computer
                 applications (including, but not limited to those of its
                 Dealers, suppliers, vendors and subservicers, but only to the
                 extent that the failure of any such applications of its
                 Dealers, suppliers, vendors and subservicers to be Year 2000
                 Compliant would be reasonably likely to have material adverse
                 effect), which are related to or involved in the collection,
                 management or servicing of the Receivables and Related Security
                 (the "Management Systems"), and (E) has determined that such
                       ------------------
                 Management Systems are Year 2000 Compliant.

          (ii)   All of the representations and warranties set forth in this
                 Section 3.01 (r) (other than representations and warranties, if
                 ----------------
                 any, that expressly speak only as of a different date) shall be
                 deemed to be made, without further act by any Person, on and as
                 of the Closing Date. All of the representations and warranties
                 set forth in this Section 3.01 (r) shall survive the
                                   ----------------
                 termination of this Insurance Agreement.

          (s)  Investment Company.  Neither TFC nor TFCRC is an "investment
               ------------------
     company" or a company "controlled" by an "investment company" within the
     meaning of the Investment Company Act, and none of the execution, delivery
     or performance of obligations under the Agreement or any of the Transaction
     Documents or the consummation of any of the transactions contemplated
     thereby will violate any provision of the Investment Company Act, or any
     rule, regulation or order issued by the Securities and Exchange Commission
     thereunder.

          (t)  No Restrictions on TFCRC Affecting Its Business.  TFCRC is not a
               -----------------------------------------------
     party to any contract or agreement, or subject to any charter or other
     corporate restriction which materially and adversely affects it business.

          (u)  Perfection of Security Interest.  All filings and recordings as
               -------------------------------
     may be necessary to perfect the interest of the Issuer in the Receivables
     have been accomplished

                                       25
<PAGE>

     and are in full force and effect. TFCRC will from time to time, at its own
     expense, execute and file such additional financing statements (including
     continuation statements) as may be necessary to ensure that at any time,
     the interest of the Issuer in all of the Receivables is fully protected.

          (v)  Ownership of TFCRC.  100.00% of the issued and outstanding shares
               ------------------
     of capital stock of TFCRC are directly owned (both beneficially and of
     record) by TFC.  Such shares are validly issued, fully paid and
     nonassessable and no one other than TFC has any options, warrants or other
     rights to acquire shares of capital stock of and from TFCRC.

          (w)  No Broker, Finder or Financial Adviser Other Than Rothschild.
               ------------------------------------------------------------
     Neither TFCRC nor any of its officers, directors, employees or agents has
     employed any broker, finder or financial adviser other than Rothschild Inc.
     or incurred any liability for fees or commissions to any person other than
     Rothschild Inc. in connection with the offering, issuance or sale of the
     Notes.

          (x)  S&P.  The information supplied by TFC or TFCRC to S&P in
               ---
     connection with obtaining a rating for the Notes did not contain any untrue
     statement of a material fact or omit to state any material fact required to
     be stated in order to make such information not misleading.

          (y)  No Violation of Exchange Act or Regulations T, U or X.  None of
               -----------------------------------------------------
     the transactions contemplated in the Transaction Documents (including the
     use of the proceeds from the sale of the Notes) will result in a violation
     of Section 7 of the Securities and Exchange Act, or any regulations issued
     pursuant thereto, including Regulations T, U and X of the Board of
     Governors of the Federal Reserve System, 12 C.F.R, Chapter II.

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

     Section 3.02.  Representations and Warranties of the Issuer.  The Issuer
                    --------------------------------------------
represents and warrants, as of the Closing Date, as follows:

          (a)  Due Organization and Qualification.  The Issuer is duly formed
               ----------------------------------
     and validly existing as a Delaware statutory business trust and is in good
     standing under the laws of the State of Delaware. The Issuer is duly
     qualified to do business, is in good standing and has obtained all
     necessary licenses, permits, charters, registrations and approvals

                                       26
<PAGE>

     (together, "approvals") necessary for the conduct of its business as
     currently conducted and as described in the Offering Document and the
     performance of its obligations under the Transaction Documents, in each
     jurisdiction in which the failure to be so qualified or to obtain such
     approvals would render any Receivable or Transaction Document unenforceable
     in any material respect or would otherwise cause a Material Adverse Change
     to occur with respect to the Transaction.

          (b)  Power and Authority.  The Issuer has all necessary trust power
               -------------------
     and authority to conduct its business as currently conducted and as
     described in the Offering Document, to execute, deliver and perform its
     obligations under the Transaction Documents and has full power and
     authority to sell and assign the Receivables as contemplated by the
     Transaction Documents and to consummate the Transaction.

          (c)  Due Authorization. The execution, delivery and performance of
               -----------------
     the Transaction Documents by the Issuer have been duly authorized by all
     necessary trust action and do not require any additional approvals or
     consents or other action by, or any notice to or filing with, any Person,
     including, without limitation, any governmental entity.

          (d)  Noncontravention. None of the execution and delivery of the
               ----------------
     Transaction Documents by the Issuer, the consummation of the transactions
     contemplated thereby nor the satisfaction of the terms and conditions of
     the Transaction Documents,

          (i)    conflicts with, or results in any material breach or violation
                 of, any provision of the Certificate or the Trust Agreement, or
                 any law, rule, regulation, order, writ, judgment, injunction,
                 decree, determination or award currently in effect having
                 applicability to the Issuer or its property, including
                 regulations issued by an administrative agency or other
                 governmental authority having supervisory powers over the
                 Issuer,

          (ii)   constitutes, or will constitute, a material default by the
                 Issuer under, or a material breach of, any provision of any
                 loan agreement, mortgage, indenture or other agreement or
                 instrument to which the Issuer is a party or by which it or any
                 of its property is or may be bound or affected, or

          (iii)  results in or requires the creation of any Lien upon or in
                 respect of any of the assets of the Issuer, except as otherwise
                 expressly contemplated by the Transaction Documents.

          (e)  Legal Proceedings.  There is no action, proceeding, suit or
               -----------------
     investigation by or before any court, governmental or administrative agency
     or arbitrator against or affecting the Issuer, or any properties or rights
     of the Issuer, pending or, to the knowledge of the Issuer, threatened,
     which, in any case, if decided adversely, would result in a Material
     Adverse Change with respect to the Issuer, the Certificate or the Notes.

          (f)  Valid and Binding Obligations. Each of the Transaction
               -----------------------------
     Documents to which the Issuer is a party when executed by the Owner Trustee
     on behalf of the Issuer, will constitute the legal, valid and binding
     obligations of the Issuer enforceable against the

                                       27
<PAGE>

     Issuer in accordance with their respective terms, except as limited by
     applicable bankruptcy, insolvency, reorganization, moratorium and similar
     laws affecting the enforcement of creditors' rights generally or general
     equitable principles (whether in a proceeding at law or in equity) and
     except to the extent that rights to indemnity and contribution may be
     limited by public policy. The Certificate, when executed, authenticated and
     delivered in accordance with the Trust Agreement, will be validly issued
     and outstanding and entitled to the benefits of the Trust Agreement and
     will evidence the entire beneficial ownership interest in the Issuer. The
     Notes when executed, authenticated and delivered in accordance with the
     Indenture, will be entitled to the benefits of the Indenture and will
     constitute legal, valid and binding obligations of the Issuer, enforceable
     in accordance with their terms, except as limited by applicable bankruptcy,
     insolvency, reorganization, moratorium and similar laws affecting the
     enforcement of creditors' rights generally or general equitable principles
     (whether in a proceeding at law or in equity) and except to the extent that
     rights to indemnity and contribution may be limited by public policy.

          (g)  Accuracy of Information.  None of the Transaction Documents, nor
               -----------------------
     any of the Provided Documents, contain any statement of a material fact
     with respect to the Issuer or the Transaction that was untrue or misleading
     in any material respect when made. Since the furnishing of the Provided
     Documents, there has been no change, that would render any of the Provided
     Documents untrue or misleading in any material respect. There is no fact
     known to the Issuer which has a material possibility of causing a Material
     Adverse Change with respect to the Issuer or which has a material
     possibility of impairing the value or marketability of the Receivables,
     taken as a whole, or decreasing the possibility that amounts due in respect
     of the Receivables will be collected as due.

          (h)  Compliance With Securities Laws; Offering Document.  The Notes
               --------------------------------------------------
     have not been offered or sold in any manner that would render the issuance
     and sale of the Notes a violation of the Securities Act or any state
     securities or "Blue Sky" laws or require registration pursuant thereto, nor
     has any Person been authorized to act in such manner.  No registration
     under the Securities Act is required for the sale of the Notes as
     contemplated by the Transaction Documents, assuming the accuracy of the
     Purchaser's representations and warranties set forth in the Purchase
     Agreement, and satisfaction by the Placement Agent of its obligations set
     forth in the Placement Agency Agreement.  Without limitation of the
     foregoing, the Offering Document did not, as of its date, and does not, as
     of the date hereof, contain any untrue statement of a material fact or omit
     to state a material fact required to be stated therein or necessary to make
     the statements made therein, in light of the circumstances under which they
     were made, not misleading.

          (i)  Transaction Documents.  Each of the representations and
               ---------------------
     warranties of the Issuer contained in the Transaction Documents is true and
     correct in all material respects and the Issuer hereby makes each such
     representation and warranty made by it to, and for the benefit of, AGIC as
     if the same were set forth in full herein.

          (j)  No Consents.  No consent, license, authorization or approval
               -----------
     from, or registration or other action by, and no notice to or filing or
     declaration with, any governmental entity or regulatory body, is required
     for the due execution, delivery and

                                       28
<PAGE>

     performance by the Issuer of the Transaction Documents or any other
     material document or instrument to be delivered thereunder, except (in each
     case) as have been obtained or the failure of which to be obtained would
     not be reasonably likely to cause a Material Adverse Change with respect to
     the Transaction.

          (k)  Compliance With Law. Etc.  No practice, procedure or policy
               ------------------------
     employed or proposed to be employed by the Issuer in the conduct of its
     business violates any law, regulation, judgment, agreement, order or decree
     applicable to it which, if enforced, would result in a Material Adverse
     Change with respect to the financial condition of such Person.

          (l)  Special Purpose Entity.
               ----------------------

          (i)    The capital of the Issuer is adequate for the business and
                 undertakings of the Issuer.

          (ii)   Except as contemplated by the Transaction Documents, the Issuer
                 is not engaged in any business transactions with TFC, the
                 Parent, TFCRC or any Affiliate of any of them.

          (iii)  The Issuer's funds and assets are not, and will not be,
                 commingled with the funds of any other Person.

          (m)  Solvency: Fraudulent Conveyance. The Issuer is solvent and will
               -------------------------------
     not be rendered insolvent by the Transaction and, after giving effect to
     such Transaction, the Issuer will not be left with an unreasonably small
     amount of capital with which to engage in its business. The Issuer does not
     intend to incur, or believe that it has incurred, debts beyond its ability
     to pay such debts as they mature. The Issuer does not contemplate the
     commencement of insolvency, bankruptcy, liquidation or consolidation
     proceedings or the appointment of a receiver, liquidator, conservator,
     trustee or similar official in respect of the Issuer or any of its assets.

          (n)  Perfection of Liens and Security Interest. On the Closing Date,
               -----------------------------------------
     the Lien and security interest in favor of the Trust Collateral Agent with
     respect to the Collateral will be perfected by the filing of financing
     statements on Form UCC-1 in each jurisdiction where such recording or
     filing is necessary for the perfection thereof, the delivery of the
     Receivables Files to the Trust Collateral Agent, and the establishment of
     the Collection Account, the Spread Account and the Note Payment Account in
     accordance with the provisions of the Transaction Documents, and no other
     filings in any jurisdiction or any other actions (except as expressly
     provided herein) are necessary to perfect the Trust Collateral Agent's Lien
     on and security interest in the Collateral as against any third parties.

          (o)  Investment Company.  The Issuer is not an "investment company"
               ------------------
     or a company "controlled" by an "investment company" within the meaning of
     the Investment Company Act, and none of the execution , delivery or
     performance of obligations under the Agreement or any of the Transaction
     Documents or the consummation of any of the transactions contemplated
     thereby by the Issuer or the acquisition by the Issuer of the

                                       29
<PAGE>

     Receivables will violate any provision of the Investment Company Act, or
     any rule, regulation or order issued by the Securities and Exchange
     Commission thereunder.

          (p)  Collateral.  On the Closing Date, the Issuer will have good and
               ----------
     marketable title to each item of other Trust Property conveyed on such date
     and will own each such item free and clear of any Lien (other than Liens
     contemplated under the Indenture) or any equity or participation interest
     of any other Person.

          (q)  Security Interest in Funds and Investments.  Assuming the
               ------------------------------------------
     retention of funds in the Trust Accounts, such funds will be subject to a
     valid and perfected, first priority security interest in favor of the Trust
     Collateral Agent on behalf of the Trustee (on behalf of the Noteholders)
     and AGIC.

          (r)  No Violation of Exchange Act or Regulations T, U or X.  None of
               -----------------------------------------------------
     the transactions contemplated in the Transaction Documents will result in a
     violation of Section 8 of the Exchange Act, or any regulations issues
     pursuant thereto, including Regulations T, U and X of the Board of
     Governors of the Federal Reserve System, 12 C.F.R., Chapter II.  The Issuer
     does not own nor does it intend to carry or purchase any "Margin Security"
     within the meaning of said Regulation U, including margin securities
     originally issued by it or any "margin stock" within the meaning of said
     Regulation U.

                                  ARTICLE IV

                                   COVENANTS

     Section 4.01.  Covenants of TFCRC and TFC.  Each of TFCRC and TFC hereby
                    --------------------------
covenants and agrees that during the term of this Insurance Agreement, unless
AGIC shall otherwise expressly consent in writing:

          (a)  Compliance With Agreements and Applicable Laws.  Each of TFCRC
               ----------------------------------------------
     and TFC shall perform each of its respective obligations under the
     Transaction Documents and shall comply with all material requirements of
     any law, rule or regulation applicable to it, or that are required in
     connection with its performance under any of the Transaction Documents.
     Neither TFCRC nor TFC will cause or permit to become effective any
     amendment to or modification of any of the Transaction Documents to which
     it is a party unless AGIC shall have previously approved in writing the
     form of such amendment or modification.  Neither TFCRC nor TFC shall take
     any action or fail to take any action that would interfere with the
     enforcement of any rights of AGIC or the Trust Collateral Agent under the
     Transaction Documents.

          (b)  Reports: Other Information.  Each of TFCRC and TFC shall keep or
               --------------------------
     cause to be kept in reasonable detail books and records of account of their
     respective assets and business, and in the case of TFC, which shall clearly
     reflect the transfer of the Receivables to TFCRC, and, in the case of
     TFCRC, which shall clearly reflect the transfer of the Receivables to the
     Trust Collateral Agent. Each of TFCRC and TFC shall furnish or caused to be
     furnished to AGIC:

                                       30
<PAGE>

          (i)    Promptly upon receipt thereof, copies of all reports,
                 statements, certifications, schedules, or other similar items
                 delivered to or by TFCRC and TFC pursuant to the terms of the
                 Transaction Documents and, promptly upon request, such other
                 data as AGIC may reasonably request; provided, however, that
                 neither TFCRC nor TFC shall be required to deliver any such
                 items if provision by some other party to AGIC is required
                 under the Transaction Documents unless such other party
                 wrongfully fails to deliver such item. TFCRC and TFC shall,
                 upon the reasonable request of AGIC, permit AGIC or its
                 authorized agents (A) to inspect its books and records as they
                 may relate to the Notes, the Receivables, the obligations of
                 TFCRC and TFC under the Transaction Documents, the Transaction
                 and the business of TFC or TFCRC; (B) to discuss the affairs,
                 finances and accounts of TFCRC and TFC with an officer of each
                 upon AGIC's reasonable request; and (C) to discuss the affairs,
                 finances and accounts of TFCRC and TFC with its independent
                 accountants, provided that an officer of such Person shall have
                 the right to be present during such discussions. Such
                 inspections and discussions shall be conducted during normal
                 business hours and shall not unreasonably disrupt the business
                 of such Person. The reasonable fees and expenses of AGIC or any
                 such authorized agents shall be for the account of TFC.

          (ii)   TFC shall provide or cause to be provided to AGIC an executed
                 original copy of each document executed in connection with the
                 transaction within 30 days after the Closing Date.

          (iii)  At least 30 days prior to the implementation thereof, notice of
                 any material change to the software, hardware or other systems
                 employed by the Parent or TFC in connection with billing,
                 collecting or otherwise servicing the Receivables.

          (c)    Notice of Material Events.  TFCRC and TFC shall promptly inform
                 -------------------------
     AGIC in writing of the occurrence of any of the following:

          (i)    the submission of any claim or the initiation of any legal
                 process, litigation or administrative or judicial investigation
                 (A) against TFCRC or TFC pertaining to the Receivables in
                 general, (B) with respect to a material portion of the
                 Receivables, or (C) in which a request has been made for
                 certification as a class action (or equivalent relief) that
                 would involve a material portion of the Receivables;

          (ii)   any change in the location of the principal office of either of
                 TFCRC or TFC or any change in the location of the books and
                 records of TFCRC or TFC;

          (iii)  the occurrence of any Default, Event of Default or Trigger
                 Event; or

                                       31
<PAGE>

          (iv)   any other event, circumstance or condition that has resulted,
                 or which TFCRC or TFC, as the case may be, reasonably believes
                 might result, in a Material Adverse Change with respect to
                 TFCRC or TFC.

          (d)  Further Assurances.  Each of TFCRC and TFC will file all
               ------------------
     necessary financing statements, assignments or other instruments, and any
     amendments or continuation statements relating thereto, necessary to be
     kept and filed in such manner and in such places as may be required by law
     to preserve and protect fully the Lien on and security interest in, and all
     rights of the Trust Collateral Agent, for the benefit of the Trustee (for
     the Noteholders and AGIC), with respect to the Receivables, the Collection
     Account, the Note Payment Account and the Spread Account. In addition, each
     of TFCRC and TFC shall, upon the request of AGIC, from time to time,
     execute, acknowledge and deliver, or cause to be executed, acknowledged and
     delivered, within thirty (30) days of such request, such amendments hereto
     and such further instruments and take such further action as may be
     reasonably necessary to effectuate the intention, performance and
     provisions of the Transaction Documents or to protect the interest of the
     Issuer, the Owner Trustee, the Trustee and AGIC, in the Receivables, the
     Collection Account, the Note Payment Account and the Spread Account, free
     and clear of all Liens and Restrictions on Transferability except as
     contemplated by the Transaction Documents.  In addition, each of TFCRC and
     TFC agrees to cooperate with S&P in connection with any review of the
     Transaction which may be undertaken by S&P and after the date hereof.

          (e)  TFCRC's Corporate Existence.  TFCRC shall become qualified to do
               ---------------------------
     business and be in good standing under the laws of Virginia within fourteen
     (14) days of the Closing Date.  TFCRC shall maintain its corporate
     existence and shall at all times continue to be duly organized under the
     laws of Delaware, and duly qualified and duly authorized (as described in
     Sections 3.01 (a), (b) and (c) hereof, including, but not limited to, in
     the Commonwealth of Virginia) and shall conduct its business in accordance
     with the terms of its Certificate of Incorporation and Bylaws.

          (f)  TFC's Corporate Existence.  TFC shall maintain its corporate
               -------------------------
     existence and shall at all times continue to be duly organized under
     applicable law, and duly qualified and duly authorized (as described in
     Sections 3.01 (a), (b) and (c) hereof) and shall conduct its business in
     accordance with the terms of its Certificate of Incorporation and Bylaws.

          (g)  Disclosure Document.  Each Offering Document delivered with
               -------------------
     respect to the Notes shall clearly disclose that the Policy is not covered
     by the property/casualty insurance security fund specified in Article 76 of
     the New York Insurance Law.  In addition, each Offering Document delivered
     with respect to the Notes which includes financial statements of AGIC
     prepared in accordance with GAAP shall include the following statement
     immediately preceding such financial statements:

                 The New York State Insurance Department
                 recognizes only statutory accounting
                 practices for determining and reporting the
                 financial condition

                                       32
<PAGE>

                 and results of operations of an insurance
                 company, for determining its solvency under
                 the New York Insurance Law, and for
                 determining where its financial condition
                 warrants the payment of a dividend to its
                 stockholders. No consideration is given by
                 the New York State Insurance Department to
                 financial statements prepared in accordance
                 with GAAP in making such determinations.

          (h)  Special Purpose Entity.
               ----------------------

          (i)    TFCRC shall conduct its business solely in its own name through
                 its duly authorized officers or agents so as not to mislead
                 others as to the identity of the entity with which those others
                 are concerned; in particular, TFCRC shall (A) require that its
                 employees, if any, identify themselves as employees of TFCRC
                 when conducting business of TFCRC; (B) use its best efforts to
                 avoid the appearance that it is conducting business on behalf
                 of any Affiliate thereof or that its assets are available to
                 pay the creditors of TFC or the Parent or any Affiliate
                 thereof; (C) maintain at all times stationary separate from
                 that of any Affiliate; and (D) conduct all oral and written
                 communications, including, without limitation, letters,
                 invoices, purchase orders, contracts, statements and loan
                 applications, solely in the name of TFCRC.

          (ii)   TFCRC shall respond to any inquiries made directly to it with
                 respect to ownership of a Receivable by stating that it is the
                 owner of such contributed Receivable, and, if requested to do
                 so, that the Trust Collateral Agent has been granted a security
                 interest in such Receivable

          (iii)  TFCRC shall compensate all employees, consultant and agent
                 directly or indirectly through reimbursement of TFC, from
                 TFCRC's bank accounts, for services provided to TFCRC by such
                 employees, consultants and agents and, to the extent any
                 employee, consultant or agent of TFCRC is also an employee,
                 consultant or agent of TFC, allocate the compensation of such
                 employee, consultant or agent between TFCRC and TFC on a basis
                 which reflects the respective services rendered to TFCRC and
                 TFC.

          (iv)   TFCRC shall keep its assets and liabilities wholly separate
                 from those of all other entities, including, but not limited to
                 TFC and the Parent and the Affiliates thereof. TFCRC shall not
                 commingle its funds or other assets with those of any of its
                 Affiliates (other than in respect of items of payment or funds
                 which may be commingled until deposit into the Collection
                 Account in accordance with the Sale and Servicing Agreement),
                 and not hold its assets in any manner that would create an
                 appearance that such assets belong to any such Affiliate, not
                 maintain bank accounts or other depository accounts to which
                 any such Affiliate is an account party, into which such
                 Affiliate makes deposits or from which

                                       33
<PAGE>

                  any such Affiliate has the power to make withdrawals, and not
                  act as an agent or representative of any of its Affiliates in
                  any capacity.

          (v)     TFCRC shall not guarantee any obligation of any of its
                  Affiliates nor have any of its obligations guaranteed by any
                  such Affiliate (either directly or by seeking credit based on
                  the assets of such Affiliate), or otherwise hold itself out as
                  responsible for the debts of any Affiliate;

          (vi)    TFCRC shall maintain corporate records and books of account
                  separate from those of TFC or the Parent, and the Affiliates
                  thereof.

          (vii)   TFCRC shall obtain proper authorization from its Board of
                  Directors of all corporate action requiring such
                  authorization. Meetings of the Board of Directors of TFCRC
                  shall be held not less frequently than one time per annum, and
                  copies of the minutes of each such board meeting shall be
                  delivered to AGIC within 30 days of such meeting.

          (viii)  TFCRC shall obtain proper authorization from its shareholders
                  of all corporate action requiring shareholder approval.
                  Meetings of the shareholders of TFCRC shall be held not less
                  frequently than one time per annum, and copies of each such
                  authorization and the minutes of each such shareholder meeting
                  shall be delivered to AGIC within 30 days of such
                  authorization or meeting, as the case may be.

          (ix)    TFCRC shall (A) pay its own incidental administrative costs
                  and expenses from its own funds, (B) allocate all other shared
                  overhead expenses (including, without limitation, telephone
                  and other utility charges, the services of shared employees,
                  consultants and agent, and reasonable legal auditing
                  expenses), and other items of cost and expense shared between
                  TFCRC and any Affiliate thereof, on the basis of actual use to
                  the extent practicable, and to the extent such allocation is
                  not practicable, on a basis reasonably related to actual use
                  or the value of services rendered. TFCRC shall not permit any
                  of its Affiliates to pay the its operation expenses.

          (x)     The annual financial statements of TFCRC shall disclose the
                  effects of TFCRC's transactions in accordance with GAAP and
                  shall disclose that the assets of TFCRC are not available to
                  pay creditors of TFC, the Parent or any Affiliate thereof.
                  Without limiting the foregoing, TFCRC shall prepare its
                  financial statements separately from those of its Affiliates
                  and ensure that any consolidated financial statement have
                  notes to the effect that TFCRC is a separate entity whose
                  creditors have a claim on its assets prior to those assets
                  becoming available to its equity holders and to any of their
                  respective creditors.

          (xi)    The resolutions, agreements and other instruments of TFCRC
                  underlying the transactions described in this Insurance
                  Agreement and in the other Transaction Documents shall be
                  continuously maintained by TFCRC as

                                       34
<PAGE>

                  official records of TFCRC, separately identified and held
                  apart from the records of TFC and the Parent and each
                  affiliate thereof.

          (xii)   TFCRC shall at all times have at least two independent
                  directors who satisfy the definition of Independent Director
                  provided in its certificate of incorporation, and have at
                  least one officer responsible for managing its day-to-day
                  business and manage such business by or under the direction of
                  its board of directors.

          (xiii)  TFCRC shall take such actions as are necessary on its part to
                  ensure that the facts and assumptions set forth in the non-
                  consolidation opinion delivered by its counsel remain true and
                  correct at all times.

          (i)  Maintenance of Licenses.  Each of TFCRC and TFC shall maintain
               -----------------------
     all licenses, permits, charters and registrations which are material to the
     performance by it of its obligations under this Insurance Agreement and
     each other Transaction Document to which it is a party or by which it is
     bound.

          (j)  Transaction Documents.  Each of  TFCRC and TFC shall comply with
               ---------------------
     each of the covenants, as applicable, made by it in each of the Transaction
     Documents.

          (k)  Ownership of TFCRC.  TFC shall at all times own 100.00% of the
               ------------------
     issued and outstanding shares of capital stock of TFCRC free and clear of
     any liens.

          (l)  Civilian Portfolio.  At all times prior to December 31, 2000,
               ------------------
     unless AGIC shall otherwise consent in writing (which consent shall not be
     unreasonably withheld, delayed or conditioned), TFC shall cause

          (i)  the fraction (stated as a percentage) (A) the numerator of which
               is the aggregate outstanding principal balance of Contracts
               serviced by TFC (including, without limitation, those Contracts
               pledged to secure loans to TFC or transferred by TFC in
               connection with securitization transactions) as determined as of
               the close of business of the last day of the most recently
               concluded Monthly Period, and in respect of which the obligors
               are not military personnel and which were purchased by or on
               behalf of TFC in connection with a purchase in bulk of such
               Contracts from an originator thereof, and (B) the denominator of
               which is the aggregate outstanding principal balance of all such
               Contracts serviced by TFC as determined as of the close of
               business of the last day of such Monthly Period, not to exceed
               35.0%; and

          (ii) the fraction (stated as a percentage) (A) the numerator of which
               is the aggregate outstanding principal balance of Contracts
               serviced by TFC (including, without limitation, those Contracts
               pledged to secure loans to TFC or transferred by TFC in
               connection with securitization transactions) as determined as of
               the close of business of the last day of the most recently
               concluded Monthly Period, and in respect of which the obligors

                                       35
<PAGE>

               are not military personnel and which were purchased by or on
               behalf of TFC from a Dealer in connection with a point-of-sale
               transaction, and (B) the denominator of which is the aggregate
               outstanding principal balance of all such Contracts serviced by
               TFC as determined as of the close of business of the last day of
               such Monthly Period, not to exceed the percentage set forth below
               opposite the relevant period set forth below:

            Period                                Maximum Percentage
            ------                                ------------------

     from the Closing Date to the                       5.00%
     the third Monthly Period to
     occur after the Closing Date

     from the fourth Monthly                           10.00%
     Period to occur after the
     Closing Date to the sixth
     Monthly Period to occur
     after the Closing Date

     thereafter                                        15.00%.

          (m)  Access to Records; Discussions with Officers.  TFC shall, upon
               --------------------------------------------
     the reasonable request of AGIC, permit AGIC or its authorized agent access
     to:

          (i)    the documentation regarding the Receivables, the other Trust
                 Property, the obligations of TFC under the Transaction
                 Documents, the business of TFC and the transactions consummated
                 in connection therewith including, but not limited to, the
                 accounts, records and computer systems maintained by TFC with
                 respect thereto; and

          (ii)   any of the properties of TFC, to examine all of its books of
                 account, records, reports and other papers, to make copies and
                 extracts therefrom and to discuss its affairs, finances and
                 accounts with its officers, employees, and independent public
                 accounts (and by this provision TFC authorizes said accountants
                 to discuss the finances and affairs of TFC) (in each such case,
                 it being understood that an officer of TFC shall be entitled to
                 be present during any such examination and/or discussion).

          Such inspections and discussions shall be conducted at such reasonable
     times and as often as may be reasonably requested.  In each case, such
     access shall be afforded without charge but only upon reasonable request
     and during normal business hours.

          (n)  Benefit Plan.  Each of TFC and TFCRC shall comply in all material
               ------------
     respects with the provisions of ERISA, the Code, and all other applicable
     laws, and the regulations and interpretations thereunder to the extent
     applicable, with respect to each Benefit Plan.  Each  of TFC and TFCRC will
     not, and will cause any ERISA Affiliate not to:

                                       36
<PAGE>

          (i)    engage in any non-exempt prohibited transaction (within the
                 meaning of Code Section 4975 or ERISA Section 406) with respect
                 to any Benefit Plan which would result in a material liability
                 to either of TFC or TFCRC;

          (ii)   permit to exist any accumulated funding deficiency as defined
                 in Section 301(a) of ERISA and Section 412(a) of the Code,
                 with respect to any Benefit Plan which is subject to Section
                 302(q) of ERICA or 412 of the Code;

          (iii)  terminate any Benefit Plan of either of TFC or TFCRC or any
                 ERISA Affiliate if such termination would result in any
                 material liability to either of TFC or TFCRC or an ERISA
                 Affiliate; or

          (iv)   create any defined benefit plan (as defined in ERISA).

          (o)  Reporting and Accounting Treatment.  For reporting and accounting
               ----------------------------------
     purposes, and in its books of account and records, TFCRC will treat each
     transfer of Receivables pursuant to the Sale and Servicing Agreement as an
     absolute sale and assignment of TFCRC's full right, title and ownership
     interest in such Receivable and TFCRC will not account for or treat the
     transactions in any other manner.

          (p)  Financial Statements: Accountants' Reports: Other Information.
               -------------------------------------------------------------
     TFC shall keep, or cause to be kept, in reasonable detail books and records
     of account of its assets and business, and shall clearly reflect therein
     the transfer of the Receivables to the Issuer and the sale of the Notes to
     the underwriters as a sale of TFCRC's interest in the Receivables evidenced
     by the Notes. TFC shall furnish or cause to be furnished to AGIC:

          (i)    Annual Financial Statements.  As soon as available, and in any
                 ---------------------------
                 event within 120 days after the close of each fiscal year of
                 the Parent, the audited consolidated balance sheets of TFC and
                 the Parent as of the end of such fiscal year and the audited
                 consolidated statements of income, shareholders' equity and
                 cash flows of TFC or the Parent, as applicable, for such fiscal
                 year, all in reasonable detail and stating in comparative form
                 the respective figures for the corresponding date and period in
                 the preceding fiscal year, prepared in accordance with GAAP,
                 consistently applied, and certified by an authorized officer of
                 TFC as being complete and correct in all material respects and
                 present the financial condition and results of operations of
                 TFC or the Parent, as applicable, as of the dates and for the
                 periods indicated, in accordance with GAAP consistently
                 applied.

          (ii)   Quarterly Financial Statements. As soon as available, and in
                 ------------------------------
                 any event within 45 days after the close of the first three
                 quarters of each fiscal year of TFC and the Parent, the
                 unaudited consolidated balance sheets of as of the end of each
                 such quarter and the unaudited consolidated statements of
                 income and cash flows of TFC and the Parent for the portion of
                 the fiscal year then ended, all in reasonable detail and
                 stating in comparative form

                                       37
<PAGE>

                 the respective figures for the corresponding date and period in
                 the preceding fiscal year, prepared in accordance with GAAP,
                 consistently applied (subject to normal year-end adjustments),
                 and certified by an authorized officer of TFC as being complete
                 and correct in all material respects and present the financial
                 condition and results of operations of TFC or the Parent, as
                 applicable, as of the dates and for the periods indicated, in
                 accordance with GAAP consistently applied (subject as to
                 interim statements to normal year-end adjustments).

          (iii)  Other Information.  Promptly upon receipt thereof, copies of
                 -----------------
                 all reports, statements, certifications, schedules, or other
                 similar items delivered to or by TFC pursuant to the terms of
                 the Transaction Documents and, promptly upon request, such
                 other data as AGIC may reasonably request; provided, however,
                 that TFC shall not be required to deliver any such items if
                 provision by some other party to AGIC is required under the
                 Transaction Documents unless such other party wrongfully fails
                 to deliver such item. The reasonable fees and expenses of AGIC
                 or any such authorized agents shall be for the account of TFC.
                 In addition, TFC shall promptly (but in no case more than 30
                 days following issuance or receipt by a Commonly Controlled
                 Entity) provide to AGIC a copy of all correspondence between a
                 Commonly Controlled Entity and the PBGC, IRS, Department of
                 Labor or the administrators of a Multiemployer Plan relating to
                 any Reportable Event or the under-funded status, termination or
                 possible termination of a Plan or a Multiemployer Plan. The
                 books and records of TFC will be maintained at the address for
                 it designated herein for receipt of notices, unless it shall
                 otherwise advise the parties hereto in writing.

          (iv)   TFC shall provide, or cause to be provided, to AGIC an executed
                 original copy of each document executed in connection with the
                 Transaction within 30 days after the Closing Date.

          (q)  Agreed Upon Procedures; Reports.  (1) TFC shall cause a firm of
               -------------------------------
     nationally recognized independent certified public accountants (the
     "Independent Accountants"), who may also render other services to TFC
      -----------------------
     and/or to TFCRC, to deliver to the Board of Directors of the Servicer, to
     the Trustee, the Owner Trustee, the Trust Collateral Agent and AGIC (with a
     copy delivered to the Rating Agency):

               (i)  As soon as practical, but in no event later than 30 days
          after the delivery by the Servicer of the second Servicer's
          Certificate required to be delivered by the Servicer after the Closing
          Date pursuant to Section 4.9 of the Sale and Servicing Agreement, a
          statement (the "Initial Accountant's Statement"), in form and
          substance satisfactory to AGIC, reviewing the results of the
          Independent Accountants' performance of certain agreed upon procedures
          with respect to the Servicer, its reporting and record keeping and the
          degree of its compliance with provisions of the Basic Documents
          requiring the deposit or remittance of funds by the Servicer to the
          Collection Account, substantially to the effect that:  (1) the
          Independent Accountants have examined the accounts and

                                       38
<PAGE>

          records of the Servicer relating to the Receivables (which records
          shall be described in one or more schedules to such statement), (2)
          such firm has compared the information contained in the first and
          second Servicer's Certificates delivered by the Servicer pursuant to
          Section 4.9 of the Sale and Servicing Agreement with information
          contained in such accounts and records for such periods, (3) such firm
          has traced deposits and remittances made to the Collection Account by
          the Servicer for such periods, and (4) on the basis of the agreed upon
          procedures so performed, whether and to what extent (x) the
          information contained in such Servicer's Certificates reconciles with
          the information contained in such accounts and records, (y) such
          accounts and records of the Servicer related to the Receivables agree
          to the respective source documents, and (z) the Servicer has complied
          with the obligations set forth in the Basic Documents with respect to
          the deposits and remittances made to the Collection Account by the
          Servicer for such periods, except for such exceptions as TFC and AGIC
          believe to be immaterial and such other exceptions as shall be set
          forth in such statement;

               (ii)    In the event that the Initial Accountant's Statement
          indicates a degree of accuracy with respect to either or both of the
          first and second Servicer's Certificates deemed by AGIC to be
          unsatisfactory in the exercise of its sole discretion, as soon as
          practical after written demand therefor by AGIC to TFC and the
          Independent Accountants (which demand may be made as frequently as
          deemed necessary in the sole discretion of AGIC), but in no event
          later than 30 days after the delivery to AGIC by the Servicer of any
          subsequent Servicer's Certificate constituting the subject of such
          demand, a statement (each, an "Additional Accountant's Statement"), in
          form and substance satisfactory to AGIC, reviewing the results of the
          Independent Accountants' performance of certain agreed upon procedures
          with respect to then most recently completed and delivered Servicer's
          Certificate, and otherwise covering the same subjects, and having the
          same scope, as the Initial Accountant's Statement; provided, however,
                                                             --------  -------
          that AGIC shall not demand Additional Accountant's Statements if and
          to the extent that no fewer than three consecutive Additional
          Accountant's Statements are deemed by AGIC, in the exercise of its
          sole discretion, to indicate a high degree of accuracy with respect to
          the related Servicer's Certificate; and

               (iii)   As soon as practical, but in no event later than 90 days
          after the end of each calendar year during the term hereof (commencing
          with the calendar year 2000), a statement (each, an "Annual
          Accountant's Statement"), in form and substance satisfactory to AGIC,
          reviewing the results of the Independent Accountants' performance of
          certain agreed upon procedures with respect to a sample of six of the
          preceding twelve Servicer's Certificates (randomly selected by such
          Independent Accountants; provided that in no event shall any of the
                                   --------
          Servicer's Certificates so selected include any of the Servicer's
          Certificates which formed the basis of the Initial Accountant's
          Statement or any of the Additional Accountant's Statement), and
          otherwise covering the same subjects, and having the same scope, as
          the Initial Accountant's Statement; and

                                       39
<PAGE>

               (iv)  TFC shall use its best efforts to arrive at a mutually
          satisfactory agreement with AGIC concerning the agreed upon procedures
          referred to in each of clauses (i) and (iii) above, by no later than
          January 31, 2000.

          (2)  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, 2000, with respect to the twelve months ended on the immediately
preceding December 31 (or other applicable date) (or such other period as shall
have elapsed from the Closing Date to the date of such certificate) the
financial statements of TFC containing a report of the Independent Accountants
to the effect that such firm has examined the books and records of TFC and that,
on the basis of such examination conducted in compliance with generally accepted
audit standards, such financial statements accurately reflect the financial
condition of TFC, in each case certified by a Responsible Officer of TFC to be
true, accurate and complete copies of such financial statements. The statements
referenced above shall also indicate that the Independent Accountants are
independent of TFC and TFCRC within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.

          (3)  In the event such Independent Accountants require the Trust
Collateral Agent to agree to the procedures to be performed by such firm in any
of the reports required to be prepared pursuant to this Section 4.01(q), TFC, in
its capacity as Servicer only, shall direct the Trust Collateral Agent in
writing to so agree; it being understood and agreed that the Trust Collateral
Agent will deliver such letter of agreement in conclusive reliance upon the
direction of the Servicer, and the Trust Collateral Agent has not made any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures.

          (4)  All fees, costs and expenses incurred by AGIC and the Trust
Collateral Agent in connection with obtaining any of the foregoing described
statements shall be for the sole cost and expense of TFC.

          (r)  Title Certificates of Financed Vehicles. On or before January 31,
               ---------------------------------------
     2000, TFC shall deliver to the Trust Collateral Agent, as custodian, the
     original title certificate for each of the Financed Vehicles, to be held by
     the Trust Collateral Agent as part of the Receivables Files pursuant to
     Section 3.3.(a) of the Sale and Servicing Agreement.

          (s)  Fort Knox letters.  On or before December 31, 1999,  TFC shall
               -----------------
     deliver the fully executed Fort Knox Additional Letters to the Trust
     Collateral Agent and AGIC.

          (t)  UCC-3 Matters.  Within fifteen (15) days of the Closing Date, TFC
               -------------
     and TFRC shall:

               (x)  execute, deliver and file in the appropriate filing office
          set forth below, the following UCC-3 financing statements:  (1) an
          assignment of the UCC-1 financing statement, filing no. 9962512, filed
          with the Secretary of State of the State of Delaware, to the Trust
          Collateral Agent; (2) an assignment of the UCC-1 financing statement,
          filing no. 9911307186, filed with the Secretary of State of the
          Commonwealth of Virginia, to the Trust Collateral Agent; and (3) an

                                       40
<PAGE>

          assignment of the UCC-1 financing statement, filing no.99-1666, filed
          with the clerk, Circuit Court of the City of Norfolk, Virginia, to the
          Trust Collateral Agent; and

               (y)  execute and deliver, an assignment of all of the rights,
          title and interest of the Issuer in, to and under (a) the UCC-1
          financing statement, filing no. 9911307187, filed with the Secretary
          of State of the Commonwealth of Virginia, and (b) the UCC-1 financing
          statement, filing no.99-16665, filed with the clerk, Circuit Court of
          the City of Norfolk, Virginia, to the Trust Collateral Agent.

     Section 4.02.  Negative Covenants with Respect to TFCRC and TFC.  Each of
                    ------------------------------------------------
TFCRC and TFC hereby covenants and agrees that during the term of this Insurance
Agreement, unless AGIC shall otherwise expressly consent in writing, which
consent shall not be unreasonably withheld:

          (a)  Restrictions on Liens.  Neither TFCRC nor TFC shall, except as
               ---------------------
     contemplated by the Transaction Documents, (i) create, incur or suffer to
     exist, or agree to create, incur or suffer to exist, or consent to cause or
     permit in the fixture (upon the happening of a contingency or otherwise)
     the creation, incurrence or existence of any Lien or Restriction on
     Transferability of the Receivables, or (ii) sign or file under the Uniform
     Commercial Code of any jurisdiction any financing statement which names
     TFCRC or TFC as a debtor, or sign any security agreement authorizing any
     secured party thereunder to file such financing statement, with respect to
     the Receivables.

          (b)  Impairment of Rights.  Neither TFCRC nor TFC shall take any
               --------------------
     action, or fail to take any action, if such action or failure to take
     action may reasonably be expected to (i) interfere with the enforcement of
     any rights under the Transaction Documents that are material to the rights,
     benefits or obligations of the Trustee, the Certificate holder or AGIC,
     (ii) result in a Material Adverse Change with respect to the Receivables,
     or (iii) impair the ability of TFCRC or TFC to perform their respective
     obligations under the Transaction Documents.

          (c)  Waiver. Amendments, Etc.  Neither TFCRC nor TFC shall waive,
               -----------------------
     modify or amend, or consent to any waiver, modification or amendment of,
     any of the provisions of any of the Transaction Documents.

          (d)  Succesor. Neither TFCRC nor TFC shall terminate or designate, or
               --------
     consent to the termination or designation of, the Servicer, the Trustee,
     the Back-up Servicer, the Trust Collateral Agent, the Owner Trustee or any
     successor thereto.

          (e)  Creation of Indebtedness: Guarantees.  TFCRC shall not create,
               ------------------------------------
     incur, assume or suffer to exist any Indebtedness.  TFCRC shall not assume,
     guarantee, endorse or otherwise be or become directly or contingently
     liable for the obligations of any Person by, among other things, agreeing
     to purchase any obligation of another Person, agreeing to advance funds to
     such Person or causing or assisting such Person to maintain any amount of
     capital.

                                       41
<PAGE>

          (f)  Subsidiaries.  TFCRC shall not form, or cause to be formed, any
               ------------
     Subsidiaries.

          (g)  Issuance of Stock.  TFCRC shall not issue any shares of capital
               -----------------
     stock or rights, warrants or options in respect of capital stock or
     securities convertible into or exchangeable for capital stock.

          (h)  No Mergers.  TFCRC shall not consolidate with or merge into any
               ----------
     Person or transfer all or any material amount of their respective assets to
     any Person or liquidate or dissolve.

          (i)  No Related Transactions.
               -----------------------

          (i)    TFCRC shall not conduct transactions with the Parent, TFC or
                 any other Affiliate of the Parent or TFCRC or with any
                 shareholder, director, officer, or employee of TFCRC, other
                 than in the ordinary course of business and on an arm's length
                 basis upon fair and reasonable terms materially no less
                 favorable to TFCRC than would be obtained in a comparable
                 arm's-length transaction with a Person not an Affiliate of the
                 Parent or TFCRC or a shareholder, director, officer, or
                 employee of TFCRC, as the case may be; and

          (ii)   TFC shall not conduct transactions with the Parent, TFCRC or
                 any other Affiliate of the Parent or TFC or with any
                 shareholder, director, officer, or employee of TFC which would
                 cause a Material Adverse Change with respect to the financial
                 condition or operations of TFC, other than in the ordinary
                 course of business and on an arm's-length basis upon fair and
                 reasonable terms materially no less favorable to TFC than would
                 be obtained in a comparable arm's-length transaction with a
                 Person not an Affiliate of the Parent or TFC or a shareholder,
                 director, officer, or employee of TFC, as the case may be.

          (j)  No Sale of Assets. TFCRC shall not sell, transfer, exchange or
               -----------------
     otherwise dispose of any of its assets except pursuant to securitization
     transactions as expressly permitted under the Transaction Documents.

          (k)  Other Activities.  TFCRC shall not engage in any business or
               ----------------
     activity other than in connection with the Transaction Documents, other
     transactions with respect to which AGIC acts as insurer of a financial
     guaranty insurance policy in order to guaranty asset-backed notes or
     certificates issued by an affiliate of TFCRC and as permitted by its
     certificate of incorporation.

          (l)  Insolvency.  Neither TFCRC nor TFC shall commence with respect to
               ----------
     TFCRC or the Issuer any case, proceeding or other action (A) under any
     existing or future law of any jurisdiction, domestic or foreign, relating
     to the bankruptcy, insolvency, reorganization or relief of debtors, seeking
     to have an order for relief entered with respect to it, or seeking
     reorganization, arrangement, adjustment, winding-up, liquidation,
     dissolution, corporation or other relief with respect to it or (B) seeking
     appointment of a receiver, trustee, custodian or other similar official for
     it or for all or any substantial part

                                       42
<PAGE>

     of its assets, or make a general assignment for the benefit of its
     creditors. Neither of TFCRC nor TFC shall take any action in furtherance
     of, or indicating the consent to, approval of, or acquiescence in any of
     the acts set forth above. TFCRC shall not admit in writing its inability to
     pay its debts.

          (m)  Tangible Net Worth of TFC.  TFC shall not permit its Tangible Net
               -------------------------
     Worth, at any time, to be less than the sum of (i) $30,000,000 plus (ii)
     50% of the net earnings (after taxes) of TFC for the period commencing on
     September 30, 1999 and ending at the end of TFC's then most recently
     concluded fiscal quarter (treated for this purpose as a single accounting
     period).  For purposes of this clause,  if net earnings of TFC for any
     period shall be less than zero, the amount calculated pursuant to clause
     (ii) above for such period shall be zero.

          (n)  No Change in Name, Etc.  (i) TFCRC shall not make any change to
               -----------------------
     its corporate name, or use any trade names, fictitious names, assumed names
     or "doing business as" names.  (ii) TFC shall not change its name
     (including using any trade names, fictitious names, assumed names or "doing
     business as" names),  identity or organizational structure in any manner
     that would, could or might make any financing statement or continuation
     statement filed in accordance with Section 4.01(d) above seriously
     misleading within the meaning of Section 9-402(7) of the UCC, unless it
     shall have given AGIC at least 60 days' prior written notice thereof and
     shall have filed before the date of such change appropriate amendments to
     all such previously filed financing statements or continuation statements.

          (o)  No Merger or Consolidation of, or Assumption of the Obligations
               ---------------------------------------------------------------
     of TFC. (x) TFC 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 TFC's
     business unless, after the merger, consolidation, conveyance, transfer,
     lease or succession, the successor or surviving entity, there shall be no
     Material Adverse Change with respect to the ability of the surviving entity
     to fulfill its duties contained in this Insurance Agreement.  Any
     corporation (i) into which TFC may be merged or consolidated, (ii)
     resulting from any merger or consolidation to which TFC shall be a party,
     (iii) which acquires by conveyance, transfer, or lease substantially all of
     the assets of TFC, or (iv) succeeding to the business of TFC, in any of the
     foregoing cases shall execute an agreement of assumption to perform every
     obligation of TFC under this Insurance Agreement and, whether or not such
     assumption agreement is executed, shall be the successor to TFC under this
     Insurance Agreement without the execution or filing of any paper or any
     further act on the part of any of the parties to this Insurance Agreement,
     anything in this Insurance Agreement to the contrary notwithstanding;
     provided, however, that nothing contained herein shall be deemed to release
     --------  -------
     TFC from any obligation.  TFC shall provide notice of any merger,
     consolidation or succession pursuant to this Section 4.02(o) to the Issuer,
     the Trust Collateral Agent, the Noteholders, AGIC and the Rating Agency.
     Notwithstanding the foregoing, TFC shall not merge or consolidate with any
     other Person or permit any other Person to become a successor to TFC's
     business, unless (x) immediately after giving effect to such transaction,
     no representation or warranty made by TFC with respect to the business,
     operations or condition (financial or otherwise of TFC) pursuant to this
     Insurance

                                       43
<PAGE>

     Agreement (by way of avoidance of doubt, the representations and warranties
     referred to in this clause (x) shall exclude the representations and
     warranties made under Schedule B of the Purchase Agreement) shall have been
     breached (for purposes hereof, such representations and warranties shall
     speak as of the date of the consummation of such transaction) and no event
     that, after notice or lapse of time, or both, would become an Insurance
     Agreement Event of Default shall have occurred and be continuing, (y) TFC
     shall have delivered to the Issuer, the Trust Collateral Agent, the Rating
     Agency and AGIC 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 4.02(o) and that all conditions
     precedent, if any, provided for in this Insurance Agreement relating to
     such transaction have been complied with, and (z) TFC shall have delivered
     to the Issuer, the Trust Collateral Agent, the Rating Agency and AGIC an
     Opinion of Counsel, stating 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 Trust Collateral Agent in the Receivables and the Other
     Conveyed Property and reciting the details of the filings or (B) no such
     action shall be necessary to preserve and protect such interest.

     Section 4.03.  Affirmative Covenants of the Issuer.  The Issuer hereby
                    -----------------------------------
covenants and agrees that during the term of this Insurance Agreement:

          (a)  Compliance With Agreements and Applicable Laws.  The Issuer shall
               ----------------------------------------------
     perform each of its obligations under the Transaction Documents and shall
     comply with all material requirements of, and the Notes shall be offered
     and sold in accordance with, any law, rule, regulation or order applicable
     to it or thereto, or that are required in connection with its performance
     under any of the Transaction Documents. The Issuer will not cause or permit
     to become effective any amendment to or modification of any of the
     Transaction Documents to which it is a party unless the Controlling Party
     shall have previously approved in writing the substance of such amendment
     or modification.  The Issuer shall not take any action or fail to take any
     action that would interfere with the enforcement of any rights under the
     Transaction Documents.

          (b)  Certain Information.  The Issuer shall keep, or cause to be kept,
               -------------------
     in reasonable detail books and records of account of its assets and
     business, which shall be furnished to AGIC upon request. The Issuer shall
     furnish to AGIC, simultaneously with the delivery of such documents to the
     Trustee, the Noteholders or the Certificate holder, as the case may be,
     copies of all reports, certificates, statements, financial statements or
     notices furnished to the Trustee, the Noteholders or the Certificate
     holder, as the case may be, pursuant to the Transaction Documents.  In
     addition, the Issuer shall furnish to AGIC the following:

          (i)    Certain Information.  Not less than two weeks prior to the date
                 -------------------
                 of filing with the IRS of any tax return or amendment thereto,
                 copies of the proposed form of such return or amendment and,
                 promptly after the filing or sending thereof, (A) copies of
                 each tax return and amendment thereto that the Issuer files
                 with the IRS and (B) copies of all financial statements,
                 reports, and registration statements which the Issuer files
                 with, or delivers

                                       44
<PAGE>

                 to, any federal government agency, authority or body which
                 supervises the issuance of securities by the Issuer.

          (ii)   Other Information. Promptly upon the request of AGIC, copies of
                 -----------------
                 all schedules, financial statements or other similar reports
                 delivered to or by the Issuer pursuant to the terms of this
                 Insurance Agreement and the other Transaction Documents and
                 such other data as AGIC may reasonably request.

          (c)  Access to Records; Discussions with Officers.  The Issuer shall,
               --------------------------------------------
     upon the reasonable request of AGIC, permit AGIC or its authorized agent:

          (i)    to inspect such books and records of the Issuer as may relate
                 to the Notes, the Certificate, the Receivables and the other
                 Trust Property, the obligations of the Issuer under the
                 Transaction Documents, the business of the Issuer and the
                 transactions consummated in connection therewith; and

          (ii)   to discuss the affairs, finances and accounts of the Issuer
                 with an appropriate officer of the Issuer.

          Such inspections and discussions shall be conducted at such reasonable
     times and as often as may be reasonably requested.  In each case, such
     access shall be afforded without charge but only upon reasonable request
     and during normal business hours.

          (d)  Notice of Material Events.  The Issuer shall promptly inform AGIC
               -------------------------
     in writing of the occurrence of any of the following:

          (i)    the submission of any claim or the initiation of any legal
                 process, litigation or administrative or judicial investigation
                 against the Issuer in any federal, state or local court or
                 before any arbitration board, or any such proceeding threatened
                 by any governmental agency, which, if adversely determined,
                 would cause a Material Adverse Change to occur with respect to
                 the Receivables as a whole, or which, if adversely determined,
                 would cause a Material Adverse Change to occur with respect to
                 the ability of the Issuer to perform its obligations under any
                 Transaction Document;

          (ii)   any change in the location of the Issuer's principal office or
                 any. change in the location of the books and records of the
                 Issuer;

          (iii)  the occurrence of any Default or Trigger Event; or

          (iv)   any other event, circumstance or condition that has resulted,
                 or which is reasonably likely to result, in a Material Adverse
                 Change with respect to the Issuer.

          (e)  Further Assurances.  The Issuer will file all necessary financing
               ------------------
     statements, assignments or other instruments, and any amendments or
     continuation statements relating thereto, necessary to be kept and filed in
     such manner and in such places as may

                                       45
<PAGE>

     be required by law to preserve and protect fully the Lien on and security
     interest in, and all rights of the Trust Collateral Agent with respect to
     the Collateral under the Indenture. In addition, the Issuer shall, upon the
     request of AGIC, from time to time, execute, acknowledge and deliver, or
     cause to be executed, acknowledged and delivered, within thirty (30) days
     of such request, such amendments hereto and such further instruments and
     take such further action as may be reasonably necessary to effectuate the
     intention, performance and provisions of the Transaction Documents or to
     protect the interest of the Trust Collateral Agent in the Collateral under
     the Indenture. In addition, the Issuer agrees to cooperate with S&P in
     connection with any review of the Transaction which may be undertaken by
     S&P after the date hereof.

          (f)  Retirement of Notes.  The Issuer shall, upon retirement of the
               -------------------
     Notes, furnish to AGIC a notice of such retirement, and, upon such
     retirement and the expiration of the term of the Policy, surrender the
     Policy to AGIC for cancellation.

          (g)  Preservation of Existence.  The Issuer shall observe in all
               -------------------------
     material respects all procedures required by its Certificate and Trust
     Agreement and preserve and maintain its existence as a trust and its
     rights, franchises and privileges in the jurisdiction of its organization,
     and shall qualify and remain qualified in good standing in each
     jurisdiction where the nature of its business requires it to do so except
     where the failure to be so qualified, in good standing and to maintain its
     rights, franchises and privileges would not cause a Material Adverse Change
     to occur with respect to the financial condition of the Issuer, or its
     ability to perform its obligations under this Insurance Agreement or under
     any other Transaction Document to which it is party.

          (h)  Disclosure Document.  Each Offering Document with respect to the
               -------------------
     Notes shall include only information concerning AGIC that is supplied or
     consented to in writing by AGIC expressly for inclusion therein.   Each
     Offering Document delivered with respect to the Notes shall clearly
     disclose that the Policy is not covered by the property/casualty insurance
     security fund specified in Article 76 of the New York Insurance Law. In
     addition, each Offering Document delivered with respect to the Notes which
     includes financial statements of AGIC prepared in accordance with GAAP (but
     excluding any Offering Document in which such financial statements are
     incorporated by reference) shall include the following statement
     immediately preceding such financial statements:

                 The New York State Insurance Department
                 recognizes only statutory accounting
                 practices for determining and reporting the
                 financial condition and results of
                 operations of an insurance company, for
                 determining its solvency under the New York
                 Insurance Law, and for determining where
                 its financial condition warrants the
                 payment of a dividend to its stockholders.
                 No consideration is given by the New York
                 State Insurance Department to financial
                 statements prepared in accordance with

                                       46
<PAGE>

                 generally accepted accounting principles in
                 making such determinations.

          (i)  Special Purpose Entity.
               ----------------------

          (i)    The Issuer shall conduct its business solely in its own name
                 through its duly authorized officers or agents so as not to
                 mislead others as to the identity of the entity with which
                 those others are concerned, and particularly will use its best
                 efforts to avoid the appearance of conducting business on
                 behalf of the Parent, TFC, TFCRC or any other Affiliates
                 thereof or that the assets of the Issuer are available to pay
                 the creditors of the Parent, TFC, TFCRC or any other Affiliates
                 thereof. Without limiting the generality of the foregoing, all
                 oral and written communications, including, without limitation,
                 letters, invoices, purchase orders, contracts, statements and
                 loan applications, will be made solely in the name of the
                 Issuer.

          (ii)   The Issuer shall maintain trust records and books of account
                 separate from those of the Parent, TFC, TFCRC and Affiliates of
                 any of them.

          (iii)  The Issuer shall obtain proper authorization from its equity
                 owners of all trust action requiring such authorization, and
                 copies of each such authorization and the minutes or other
                 written summary of each such meeting shall be delivered to AGIC
                 within 30 days of such authorization or meeting as the case may
                 be.

          (iv)   Although the organizational expenses of the Issuer have been
                 paid by TFC, operating expenses and liabilities of the Issuer
                 shall be paid from its own funds.

          (v)    The annual financial statements of the Issuer shall disclose
                 the effects of the Issuer's transactions in accordance with
                 GAAP and shall disclose that the assets of the Issuer are not
                 available to pay creditors of the Parent, TFC, TFCRC or any
                 Affiliate of any of them.

          (vi)   The resolutions, agreements and other instruments of the Issuer
                 underlying the transactions described in this Insurance
                 Agreement and in the other Transaction Documents shall be
                 continuously maintained by the Issuer as official records of
                 the Issuer separately identified and held apart from the
                 records of the Parent, TFC, TFCRC and each Affiliate of any of
                 them.

          (vii)  The Issuer shall maintain an arm's-length relationship with the
                 Parent, TFC, TFCRC and each Affiliate of any of them and will
                 not hold itself out as being liable for the debts of any such
                 Person.

          (viii) The Issuer shall keep its assets and its liabilities wholly
                 separate from those of all other entities, including, but not
                 limited to the Parent, TFC,

                                      47
<PAGE>

                 TFCRC and each Affiliate of any of them except, in each case,
                 as contemplated by the Transaction Documents.

          (j)  Tax Matters.  The Issuer will take all actions reasonably
               -----------
     necessary to ensure that for federal and State income tax purposes the
     Issuer is not taxable as an association (or publicly traded partnership)
     taxable as a corporation.

          (k)  Securities Laws.  The Issuer shall comply in all material
               ---------------
     respects with all applicable provisions of State and federal securities
     laws, including blue sky laws and the Securities Act, the Securities
     Exchange Act and the Investment Company Act and all rules and regulations
     promulgated thereunder for which non-compliance would result in a Material
     Adverse Change with respect to the Issuer.

          (l)  Incorporation of Covenants.  The Issuer shall comply with each of
               --------------------------
     the Issuer's covenants set forth in the Transaction Documents and hereby
     incorporates such covenants by reference as if each were set forth herein.

          (m)  Reports.  The Issuer shall furnish to AGIC:
               -------

          (i)    Annual Financial Statements.  As soon as available, and in any
                 ---------------------------
                 event within 120 days after the close of each fiscal year, its
                 audited balance sheets as of the end of such fiscal year and
                 the audited statements of income, shareholders' equity and cash
                 flows for such fiscal year, all in reasonable detail and
                 stating in comparative form the respective figures for the
                 corresponding date and period in the preceding fiscal year,
                 prepared in accordance with GAAP, consistently applied, and
                 accompanied by the certificate of independent accountants
                 (which shall be a nationally recognized firm or otherwise
                 acceptable to AGIC) and certified by an authorized officer of
                 the Issuer as being complete and correct in all material
                 respects and present the financial condition and results of
                 operations of the Issuer as of the dates and for the periods
                 indicated, in accordance with GAAP consistently applied.

          (ii)   Quarterly Financial Statements. As soon as available, and in
                 ------------------------------
                 any event within 45 days after the close of the first three
                 quarters of each fiscal year of the Issuer, the unaudited
                 balance sheets of as of the end of each such quarter and the
                 unaudited statements of income and cash flows of the Issuer for
                 the portion of the fiscal year then ended, all in reasonable
                 detail and stating in comparative form the respective figures
                 for the corresponding date and period in the preceding fiscal
                 year, prepared in accordance with GAAP, consistently applied
                 (subject to normal year-end adjustments), and certified by an
                 authorized officer of the Issuer as being complete and correct
                 in all material respects and present the financial condition
                 and results of operations of the Issuer as of the dates and for
                 the periods indicated, in accordance with GAAP consistently
                 applied (subject as to interim statements to normal year-end
                 adjustments).

                                       48
<PAGE>

          (iii)  Other Information.  Promptly upon receipt thereof, copies of
                 -----------------
                 all reports, statements, certifications, schedules, or other
                 similar items delivered to or by the Issuer pursuant to the
                 terms of the Transaction Documents and, promptly upon request,
                 such other data as AGIC may reasonably request. The fees and
                 expenses of AGIC or any such authorized agents shall be for the
                 account of the Issuer. The books and records of the Issuer will
                 be maintained at the address for it designated herein for
                 receipt of notices or at the Servicer, unless it shall
                 otherwise advise the parties hereto in writing.

     Section 4.04.  Negative Covenants on Behalf of the Issuer.  TFCRC as
                    ------------------------------------------
depositor under the Trust Agreement, on behalf of the Issuer, hereby covenants
and agrees, that during the term of this Insurance Agreement, unless AGIC shall
otherwise expressly consent in writing:

          (a)  Restrictions on Liens.  The Issuer shall not, except as
               ---------------------
     contemplated by the Transaction Documents, (i) create, incur or suffer to
     exist, or agree to create, incur or suffer to exist, or consent to cause or
     permit in the future (upon the happening of a contingency or otherwise) the
     creation, incurrence or existence of any Lien or Restriction on
     Transferability of the Receivables, or (ii) sign or file under the Uniform
     Commercial Code of any jurisdiction any financing statement which names the
     Issuer as a debtor, or sign any security agreement authorizing any secured
     party thereunder to file such financing statement, with respect to the
     Receivables.

          (b)  Impairment of Rights.  The Issuer shall not take any action, or
               --------------------
     fail to take any action, if such action or failure to take action would be
     reasonably likely to (i) interfere with the enforcement of any rights under
     the Transaction Documents that are material to the rights, benefits or
     obligations of the Trustee, the Certificate holder, the Noteholders or
     AGIC, (ii) result in a Material Adverse Change with respect to the
     Receivables, or (iii) impair the ability of the Issuer to perform its
     obligations under the Transaction Documents.

          (c)  Waiver, Amendments. Etc.  The Issuer shall not waive, modify or
               ------------------------
     amend, or consent to any waiver, modification or amendment of, any of the
     provisions of any of the Transaction Documents.

          (d)  Successors.  The Issuer shall not terminate or designate, or
               ----------
     consent to the termination or designation of, the Servicer, Back-up
     Servicer, the Trustee, the Trust Collateral Agent, the Owner Trustee or any
     successor thereto.

          (e)  Creation of Indebtedness; Guarantees.  Other than the Transaction
               ------------------------------------
     Documents, the Issuer shall not create, incur, assume or suffer to exist
     any Indebtedness other than Indebtedness guaranteed or approved in writing
     by AGIC.  The Trustee shall not assume, guarantee, endorse or otherwise be
     or become directly or contingently liable for the obligations of any Person
     by, among other things, agreeing to purchase any obligation of another
     Person, agreeing to advance funds to such Person or causing or assisting
     such Person to maintain any amount of capital.

                                       49
<PAGE>

          (f)  Subsidiaries.  The Issuer shall not form, or cause to be formed,
               ------------
     any Subsidiaries.

          (g)  No Mergers.  The Issuer shall not consolidate with or merge into
               ----------
     any Person or transfer all or any material amount of its assets to any
     Person, liquidate or dissolve except as permitted by the Trust Agreement
     and as contemplated by the Transaction Documents.

          (h)  Other Activities. The Issuer shall not:
               ----------------

          (i)    sell, pledge, transfer, exchange or otherwise dispose of any of
                     its assets except as permitted under the Transaction
                     Documents; or

          (ii)   engage in any business or activity except as contemplated by
                     the Transaction Documents and as permitted by the Trust
                     Agreement.

          (i)  Insolvency.  The Issuer shall not commence any case, proceeding
               ----------
     or other action (A) under any existing or future law of any jurisdiction,
     domestic or foreign, relating to the bankruptcy, insolvency, reorganization
     or relief of debtors, seeking to have an order for relief entered with
     respect to it, or seeking reorganization, arrangement, adjustment, winding-
     up, liquidation, dissolution, corporation or other relief or (B) seeking
     appointment of a receiver, trustee, custodian or other similar official for
     it or for all or any substantial part of its assets or make a general
     assignment for the benefit of its creditors. The Issuer shall not take any
     action in furtherance of, or indicating the consent to, approval of, or
     acquiescence in, any of the acts set forth above. The Issuer shall not
     admit in writing its inability to pay its debts.

                                   ARTICLE V

                              FURTHER AGREEMENTS

     Section 5.01.  Obligations Absolute.  The obligations of the Issuer, TFCRC
                    --------------------
and TFC pursuant to this Insurance Agreement are absolute and unconditional and
will be paid or performed strictly in accordance with the respective terms
hereof, irrespective of:

          (a)  any lack of validity or enforceability of, or any amendment or
     other modifications of, or waiver with respect to, the Indenture, the
     Policy or the Indemnification Agreement;

          (b)  any amendment or waiver of, or consent to departure from the
     Indenture, the Policy or the Indemnification Agreement;

          (c)  the existence of any claim, set off, defense or other rights it
     may have at any time against the Trustee, the Trust Collateral Agent, any
     beneficiary or any transferee of the Policy (or any persons or entities for
     whom the Trustee, the Trust Collateral Agent, any such beneficiary or any
     such transferee may be acting), AGIC or any other person or

                                       50
<PAGE>

     entity whether in connection with the Policy, the Transaction Documents or
     any unrelated transactions;

          (d)  any statement or any other document presented under the Policy
     (including any Notice for Payment) proving to be forged, fraudulent,
     invalid or insufficient in any respect or any statement therein being
     untrue or inaccurate in any respect whatsoever;

          (e)  the inaccuracy or alleged inaccuracy of any Monthly Servicer
     Report or Notice for Payment upon which any drawing under the Policy is
     based;

          (f)  payment by AGIC under the Policy against presentation of a draft
     or certificate which does not comply with the terms of the relevant Policy;

          (g)  the bankruptcy or insolvency of AGIC, the Issuer, any other party
     or the Trust Property;

          (h)  any default or alleged default of AGIC under the Policy (other
     than any payment default by AGIC under the Policy);

          (i)  any defense based upon the failure of the Issuer or the Trust
     Property to receive all or part of the proceeds of the sale of the Notes or
     of the Servicer to receive any or all of the servicing fee or other
     compensation required under the Indenture or otherwise, or any
     nonapplication or misapplication of the proceeds of any drawing upon the
     Policy; and

          (j)  any other circumstance or happening whatsoever which would
     otherwise constitute a defense to the obligations of the Issuer, TFCRC or
     TFC hereunder.

     Section 5.02.  Reinsurance.  AGIC shall have the right to grant
                    -----------
participations in its rights under this Insurance Agreement and to enter into
contracts of reinsurance with respect to the Policy, provided that AGIC agrees
                                                     --------
that any such disposition will not alter or affect in any way whatsoever AGIC's
direct obligations hereunder and under the Policy, and provided further that any
                                                       -------- -------
reinsurer or participant will not have any rights against the Trust Property,
the Issuer, the Servicer, TFC, any Noteholders, or the Trustee and that the
Trust Property, the Issuer, the Servicer, TFC, the Noteholders, or the Trustee
shall have no obligation to have any communication or relationship whatsoever
with any reinsurer or participate in order to enforce the obligations of AGIC
hereunder and under the Policy.  None of the Issuer, the Servicer or TFC may
assign its obligations under this Insurance Agreement without the prior written
consent of AGIC, such consent not to be unreasonably withheld.

     Section 5.03.  Liability of AGIC.  Each of the Issuer, the Servicer, TFCRC,
                    -----------------
the Parent and TFC agree that neither AGIC, nor any of its officers, directors
or employees shall be liable or responsible for (except to the extent of its own
gross negligence or willful misconduct): (a) the use which may be made of the
Policy by or for any acts or omissions of another Person in connection therewith
or (b) the validity, sufficiency, accuracy or genuineness of any documents
delivered to AGIC, or of any endorsement(s) thereon, even if such documents
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged.  In furtherance and

                                       51
<PAGE>

not in limitation of the foregoing, AGIC may accept documents that appear on
their face to be in order, without responsibility for further investigation.

     Section 5.04.  [Reserved].

     Section 5.05.  Fees and Expenses.  (a) The Issuer agrees to pay all
                    -----------------
reasonable costs and expenses (including, without limitation, reasonable fees
and expenses of legal counsel and  accountants) incurred by AGIC in connection
with the negotiation, preparation, execution and delivery of the Private
Placement Memorandum, the Transaction Documents and all other documents,
instruments and agreements delivered with respect thereto, and all Rating Agency
fees incurred by AGIC in connection with the initial issuance of the Notes, in
all cases in accordance with the terms of, and subject to the limitations set
forth in, the Premium Letter.  AGIC's attorney's fees and expenses incurred in
connection with the negotiation, preparation, execution and delivery of the
Private Placement Memorandum, the Transaction Documents and all other documents,
instruments and agreements delivered with respect thereto shall be payable (i)
on the Closing Date upon the presentation of an invoice for any such fees, costs
and expenses and (ii) at any time thereafter, promptly upon presentation of an
invoice for any such fees, costs and expenses.

          (b)  TFC agrees to pay all reasonable costs and expenses (including,
     without limitation, reasonable fees and expenses of legal counsel and
     accountants) incurred by AGIC in connection with the amendment,
     modification, waiver or any similar action whether or not executed or
     completed and/or the enforcement, defense or preservation of any rights,
     including but not limited to defending, monitoring or participating in any
     litigation or proceeding (including any insolvency or bankruptcy
     proceeding) against the Issuer, the Servicer, the Parent, TFCRC or TFC, as
     the case may be, of AGIC's rights against any of them under this Insurance
     Agreement, the Policy, the Indenture, the Indemnification Agreement or any
     of the other Transaction Documents.

          (c)  TFC agrees to pay AGIC for any payments made by AGIC on behalf
     of, or advanced to, TFC, in its capacity as Servicer, or the Trustee,
     including, without limitation, any amounts payable by TFC, in its capacity
     as Servicer, or the Trustee pursuant to the Notes or any other Transaction
     Documents; and any payments made by AGIC as, or in lieu of, any servicing,
     management, trustee, custodial or administrative fees payable, in the sole
     discretion of AGIC to third parties in connection with the Transaction.

     Section 5.06.  Certain Obligations Not Recourse to TFC.  Notwithstanding
                    ---------------------------------------
any provision of Section 2.04 to the contrary, the payment obligations provided
in Section 5.05(b) and 5.05(c) (to the extent of advances to the Trustee in
respect of payments on the Notes), in each case, to the extent that such payment
obligations do not arise from any failure or default in performance by the
Parent, TFC, TFCRC, the Issuer of any of its obligations under the Transaction
Documents, and any interest on the foregoing in accordance with Section 2.04,
shall not be recourse to TFC, but shall be payable in the manner and in
accordance with priorities provided in the Sale and Servicing Agreement.

                                       52
<PAGE>

                                  ARTICLE VI

                          EVENTS OF DEFAULT; REMEDIES

     Section 6.01.  Insurance Agreement Events of Default.  The occurrence of
                    -------------------------------------
any of the following events shall constitute an Event of Default hereunder:

          (a)  any demand for payment shall be made under the Policy;

          (b)  (i) any representation or warranty made by any of the Issuer, the
     Parent, TFC, the Servicer, TFCRC or the Seller under any of the Basic
     Documents, or in any certificate or report furnished under any of the Basic
     Documents, shall prove to have been untrue or incorrect in any material
     respect when made; provided, however,  if such default has not been
                        --------  -------
     committed voluntarily and is capable of being cured, it shall be deemed a
     default hereunder only if it shall continue or fail to 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 such Person shall have been given a written
     notice by AGIC, the Trustee or the Trust Collateral Agent specifying such
     default or incorrect representation or warranty and requiring it to be
     remedied; or

          (ii) any covenant made by any of the Issuer, the Parent, TFC, the
          Servicer, TFCRC or the Seller under any of the Basic Documents, shall
          be breached in any material respect;  provided, however, if such
                                                --------  -------
          breach in the observance or performance of such covenant has not been
          committed voluntarily and is capable of being cured, it shall be
          deemed a default hereunder only if it shall continue or fail to be
          cured, or the circumstance or condition in respect of which such
          covenant was breached shall not have been eliminated or otherwise
          cured, for a period of 30 days after such Person shall have been given
          a written notice by AGIC, the Trustee or the Trust Collateral Agent
          specifying such breach and requiring it to be remedied;

          (c)  the Cumulative Net Loss Rate for any Determination Date occurring
     during a period set forth below shall be greater than the percentage set
     forth opposite such period:

          Period                                       Maximum Percentage
          ------                                       ------------------

     from the Initial Cut-Off Date to the third              2.00%
     Monthly Period to occur after the
     Initial Cut-Off Date

     from the fourth Monthly Period to                       6.50%
     occur after the Initial Cut-Off Date to the
     sixth Monthly Period to occur after
     the Initial Cut-Off Date

     from the seventh Monthly Period                        15.40%
     to occur after the Initial Cut-Off Date to

                                       53
<PAGE>

     the ninth Monthly Period after the
     Initial Cut-Off Date
     from the tenth Monthly Period to                       24.00%
     occur after the Initial Cut-Off Date to
     the 12th Monthly Period to occur
     after the Initial Cut-Off Date
     from the 13th Monthly Period to                        24.50%
     occur after the Initial Cut-Off Date to
     the 15th Monthly Period to occur
     after the Initial Cut-Off Date
     from the 16th Monthly Period to                        25.00%
     occur after the Initial Cut-Off Date to
     the 18th Monthly Period to occur
     after the Initial Cut-Off Date

     from the 19th Month Period to                          26.00%
     occur after the Initial Cut-Off Date to
     the 21st Monthly Period to occur
     after the Initial Cut-Off Date

     from the 22nd Monthly Period to                        27.30%
     occur after the Initial Cut-Off Date to
     the 24th Monthly Period to occur
     after the Initial Cut-Off Date

     from the 25th Monthly Period to                        28.60%
     occur after the Initial Cut-Off Date to
     the 27th Monthly Period to occur
     after the Initial Cut-Off Date

     from the 28th Monthly Period to                        30.00%
     occur after the Initial Cut-Off Date
     and at any time thereafter;

          (d)  [Reserved];

          (e)  any of the Issuer, TFC or TFCRC shall fail to pay its debts
     generally as they come due, or shall admit in writing its inability to pay
     its debts generally, or shall make a general assignment for the benefit of
     creditors, or shall institute any proceeding seeking to adjudicate it
     insolvent or seeking a liquidation, or shall take advantage of any
     insolvency act, or shall commence a case or other proceeding naming it as
     debtor under the United States Bankruptcy Code or similar law, domestic or
     foreign, or a case or other proceeding shall be commenced against any of
     the Issuer, TFC or TFCRC under the United States Bankruptcy Code or similar
     law, domestic or foreign, or any proceeding shall be instituted against any
     of the Issuer, TFC or TFCRC seeking liquidation of their respective assets;
     and such Person shall fail to take appropriate action resulting in the

                                       54
<PAGE>

     withdrawal or dismissal of such proceeding within 60 days or there shall be
     appointed or any of the Issuer, TFC or TFCRC shall consent to, or acquiesce
     in, the appointment of a receiver, liquidator, conservator, trustee or
     similar official in respect of such Person or the whole or any substantial
     part of its respective properties or assets or such Person shall take any
     corporate action in furtherance of any of the foregoing;

          (f)  on any Payment Date, after taking into account the application in
     accordance with Section 5.7(a) of the Sale and Servicing Agreement on the
     related Payment Date of the sum of Amount Available with respect to such
     related Payment Date and the amounts available in the Spread Account (prior
     to withdrawals therefrom in accordance with the terms of the Spread Account
     under the Sale and Servicing Agreement) any amounts payable on such related
     Payment Date pursuant to clauses (i), (ii), (iii) or (v) of Section 5.7(a)
     of the Sale and Servicing Agreement have not been paid in full;

          (g)  with respect to any Determination Date occurring during a period
     set forth below, the arithmetic average of the Delinquency Ratios for such
     Determination Date and the two immediately preceding Determination Dates
     shall be greater than the percentage set forth below opposite the period
     during which such Determination Date occurs:

          Period                                     Maximum Percentage
          ------                                     ------------------

     from the Initial Cut-Off Date to the 12th              20.00%
     Monthly Period to occur after the
     Initial Cut-Off Date

     from the 13th Monthly Period to                        23.00%
     occur after the Initial Cut-Off Date to the
     18th Monthly Period to occur after
     the Initial Cut-Off Date

     from the 19th Monthly Period to occur                  28.00%
     after the Initial Cut-Off Date and at any time
     thereafter;

          (h)  the Cumulative Net Loss Rate for any Determination Date occurring
     during a period set forth below shall be greater than the percentage set
     forth opposite such period:

          Period                                     Maximum Percentage
          ------                                     ------------------

     from the Initial Cut-Off Date to the third              1.60%
     Monthly Period to occur after the
     Initial Cut-Off Date

     from the fourth Monthly Period to                       5.50%
     occur after the Initial Cut-Off Date to the
     sixth Monthly Period to occur after
     the Initial Cut-Off Date

                                      55
<PAGE>

     from the seventh Monthly Period                        12.90%
     to occur after the Initial Cut-Off Date to
     the ninth Monthly Period after the
     Initial Cut-Off Date
     from the tenth Monthly Period to                       20.00%
     occur after the Initial Cut-Off Date to
     the 12th Monthly Period to occur
     after the Initial Cut-Off Date
     from the 13th Monthly Period to                        20.30%
     occur after the Initial Cut-Off Date to
     the 15th Monthly Period to occur
     after the Initial Cut-Off Date
     from the 16th Monthly Period to                        20.80%
     occur after the Initial Cut-Off Date to
     the 18th Monthly Period to occur
     after the Initial Cut-Off Date

     from the 19th Month Period to                          21.80%
     occur after the Initial Cut-Off Date to
     the 21st Monthly Period to occur
     after the Initial Cut-Off Date

     from the 22nd Monthly Period to                        22.80%
     occur after the Initial Cut-Off Date to
     the 24th Monthly Period to occur
     after the Initial Cut-Off Date

     from the 25th Monthly Period to                        23.80%
     occur after the Initial Cut-Off Date to
     the 27th Monthly Period to occur
     after the Initial Cut-Off Date

     from the 28th Monthly Period to                        24.90%
     occur after the Initial Cut-Off Date
     and at any time thereafter;

          (i)  the occurrence of a Servicer Termination Event;

          (j)  TFC shall fail to pay any principal, premium or interest on any
     Indebtedness having an aggregate principal amount of $1,000,000 or greater,
     when the same becomes due and payable (whether by scheduled maturity,
     required prepayment, acceleration, demand or otherwise) and such failure
     shall continue uncured and unwaived after the applicable grace period, if
     any, specified in the agreement or instrument relating to such
     Indebtedness; or any other default under any agreement or instrument
     relating to any such Indebtedness of either of TFC or any other similar
     event, shall occur and shall continue uncured and unwaived after the
     applicable grace period, if any, specified in such agreement or instrument
     if the effect of such failure to pay, other default or other event is

                                       56
<PAGE>

     to accelerate, or permit the acceleration of, the maturity of such
     Indebtedness; or any such Indebtedness shall be declared to be due and
     payable or required to be prepaid (other than by a regulatory scheduled
     required prepayment) prior to the stated maturity thereof;

          (k)  the occurrence of any Event of Default under the Indenture; and
     not cured within the applicable grace period, if any.

          (l)  the Trust Collateral Agent shall fail to have a perfected, first
     priority security interest in the Trust Property; or

          (m)  the Issuer becomes taxable as an association (or publicly traded
     partnership) taxable as a corporation for federal or state income tax
     purposes.

     Section 6.02. Remedies: Waivers.
                   -----------------

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

          (i)   declare all or a portion of the Premium that has accrued or will
                accrue payable, and the same shall thereupon (A) be immediately
                due and payable to the extent then accrued and (B) become
                immediately due and payable upon accrual to the extent accruing
                thereafter, whether or not AGIC shall have declared an "Event of
                Default" or shall have exercised, or be entitled to exercise,
                any other rights or remedies hereunder;

          (ii)  exercise any rights and remedies available under the Basic
Documents in its own capacity or in its capacity as the Person entitled to
exercise the rights of the Controlling Party under the Basic Documents,
including, without limitation, its right to accelerate the Notes, to sell the
Receivables, or to terminate TFC and to appoint a substitute Servicer; or

          (iii) take whatever action at law or in equity may appear necessary
                or desirable in its judgment to enforce performance of any
                obligation of the Issuer, The Parent, TFC or TFCRC under the
                Basic Documents.

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

          (c)   If any proceeding has been commenced to enforce any right or
     remedy under this Insurance Agreement and such proceeding has been
     discontinued or abandoned for

                                       57
<PAGE>

     any reason, or has been determined adversely to AGIC, then and in every
     such case the parties hereto shall, subject to any determination in such
     proceeding, be restored to their respective former positions hereunder,
     and, thereafter, all rights and remedies of AGIC shall continue as though
     no such proceeding had been instituted.

          (d)  AGIC shall have the right, to be exercised in its complete
     discretion, to waive any covenant, Default or Insurance Agreement Event of
     Default or collection of Premium by a writing setting forth the terms,
     conditions and extent of such waiver signed by AGIC and delivered to the
     Issuer, the Parent, TFC or TFCRC, as the case may be.  Any such waiver may
     only be effected in writing duly executed by AGIC, and no other course of
     conduct shall constitute a waiver of any provision hereof.  Unless such
     writing expressly provides to the contrary, any waiver so granted shall
     extend only to the specific event or occurrence so waived and not to any
     other similar event or occurrence.

                                  ARTICLE VII

                           MISCELLANEOUS PROVISIONS

     Section 7.01.  Amendments, Etc.  No amendment or waiver of any provision of
                    ----------------
this Insurance Agreement, nor consent to any departure therefrom, shall in any
event be effective unless in writing and signed by all of the parties hereto,
with written notice thereof to the Rating Agency in the case of any material
amendment or waiver; provided that any waiver so granted shall extend only to
the specific event of occurrence so waived and not to any other similar event or
occurrence which occurs subsequent to the date of such waiver.

     Section 7.02.  Notices.  Except to the extent otherwise expressly provided
                    -------
herein, all notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (and if sent by mail, certified or
registered, return receipt requested) or facsimile transmission and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered by hand, or three (3) Business Days after being deposited in
the mail, postage prepaid, or, in the case of facsimile transmission, when sent,
addressed as follows or to such other address or facsimile number as set forth
in a written notice delivered by a party to each other party hereto:

     If to TFC, the Parent or the Servicer:
     -------------------------------------

     The Finance Company
     5425 Robin Hood Road, Suite 101A
     Norfolk, Virginia 23513
     Attention: Chief Financial Officer
     Telephone: (757) 858-1400
     Facsimile: (757) 858-4093

     With a copy to:

     John M. Paris, Jr.

                                       58
<PAGE>

     Williams, Mullen, Clark, Dobbins P.C.
     900 One Columbus Center,
     Virginia Beach, Virginia 23462
     Attention:
     Telephone:  (757) 473-5308
     Facsimile:  (757) 473-0395

     If to TFCRC:
     -----------

     c/o The Finance Company
     5425 Robin Hood Road, Suite 101B
     Norfolk, Virginia 23513]
     Attention:  Chief Financial Officer
     Telephone: (___) ________
     Facsimile: (___) ________

     If to the Issuer:
     ----------------

     TFC Automobile Receivables Trust 1999-1
     c/o Wilmington Trust Company
     Rodney Square North
     1100 North Market Street
     Wilmington, Delaware  19890-0001
     Attention:  Corporate Trust Administration
     Telephone:  (302) 651-1000
     Facsimile:  (302) 651-8882

     If to AGIC:
     ----------

     Asset Guaranty Insurance Company
     335 Madison Avenue
     New York, NY 10017-4605
     Attention: Chief Risk Officer
     Telephone: (212) 983-5859
     Facsimile: (212) 682-5377

     If to the Back-up Servicer:
     --------------------------

     Norwest Bank Minnesota, National Association
     Sixth Street and Marquette Avenue,
     Minneapolis, Minnesota 55479
     MAC N9311-161
     Attention: Corporate Trust Services/Asset-Backed Administration
     Telephone: (612) 667-8058
     Facsimile: (612) 667-3464

                                       59
<PAGE>

     Section 7.03.  No Waiver; Remedies and Severability.  No failure on the
                    ------------------------------------
part of AGIC to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law. The parties further agree that the holding by any
court of competent jurisdiction that any remedy pursued by AGIC hereunder is
unavailable or unenforceable shall not affect in any way the ability of AGIC to
pursue any other remedy available to it. In the event any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof.

     Section 7.04.  Payments.  (a)  All payments to AGIC hereunder shall be made
                    --------
in lawful currency of the United States and in immediately available funds and
except for payments required to be made pursuant to Section 2.04 hereof, shall
be made prior to 2:00 p.m. (New York City time) on the date such payment is due
by wire transfer to:

                    Chase Manhattan Bank
                    ABA#: 021-000-021
                    Account #: 9102738722
                    Credit: Asset Guaranty Insurance Company
                    Reference: TFC: AGI Insurance Policy # FANI-0404-99337-NY

or to such other office or account as AGIC may direct. Payments received by AGIC
after 2:00 p.m. (New York City time) shall be deemed to have been received on
the next succeeding Business Day, and such extension of time shall be included
in computing interest, commissions or fees, if any, in connection with such
payment.

          (b)  Whenever any payment under this Insurance Agreement shall be
     stated to be due on a day which is not a Business Day, such payment shall
     be made on the next succeeding Business Day, and such extension of time
     shall in such cases be included in computing interest, commissions or fees,
     if any, in connection with such payment.

          (c)  Unless otherwise specified herein, AGIC shall be entitled to
     interest on all amounts owed to AGIC under this Insurance Agreement,
     together with interest on any and all amounts remaining unpaid (to the
     extent permitted by law, if in respect of any unpaid amounts representing
     interest) from the date such amounts become due until paid in full (after
     as well as before judgment), at a rate of interest equal to the Prime Rate
     from time to time in effect plus 2.0%.

     SECTION 7.05.  GOVERNING LAW AND JURY TRIAL WAIVER.  THIS INSURANCE
                    -----------------------------------
AGREEMENT SHALL BE CONSTRUED, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INSURANCE
AGREEMENT, THE POLICY OR ANY TRANSACTION CONTEMPLATED HEREBY, THEREBY OR BY THE
INDENTURE AND FOR ANY COUNTERCLAIM THEREIN.

                                       60
<PAGE>

     Section 7.06.  Counterparts.  This Insurance Agreement may be executed in
                    ------------
counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.

     Section 7.07.  Paragraph Headings, Etc.  The headings of paragraphs
                    ------------------------
contained in this Insurance Agreement are provided for convenience only.  They
form in no part of this Insurance Agreement and shall not affect its
construction or interpretation.

     Section 7.08.  No Petition.  Each of the parties hereto agrees that it will
                    -----------
not institute against, or join any other Person in instituting against, the
Issuer or the Trust Property any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any federal or
state bankruptcy or similar law, for one year and one day after satisfaction of
all of the Issuer's payment obligations under the Notes, the Premium Letter and
the Reimbursement Obligations. The provisions of this Section 7.08 shall survive
the termination of this Insurance Agreement.

      Section 7.09.  Limitation of Owner Trustee Liability.  It is expressly
                     -------------------------------------
understood and agreed by the parties hereto that (a) this Insurance 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 Insurance 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 undertaking by the Issuer under this Insurance Agreement or any
related documents.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       61
<PAGE>

                                          [Insurance Agreement - signature page]

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

          ASSET GUARANTY INSURANCE COMPANY

          By: ________________________________
          Name:  Kim Nance-Meier
          Title: Vice President

          TFC RECEIVABLES CORPORATION 2

          By: ________________________________
          Name:
          Title:

          THE FINANCE COMPANY,
          individually and as Servicer

          By: ________________________________
          Name:
          Title:

                                       62
<PAGE>

                                          [Insurance Agreement - signature page]

          NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, not in its individual
          capacity, but solely as Trust Collateral Agent, Trustee and as Back-up
          Servicer

          By: ________________________________
          Name:
          Title:

          TFC AUTOMOBILE RECEIVABLES TRUST 1999-1

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

               By: ________________________________
               Name:
               Title:

                                       63
<PAGE>

                                  SCHEDULE 1

          The following table is based, in part, on The Finance Company's memo
entitled "Aged Trial Balance Report Modifications for Non-Monthly Accounts MIS
Project #2367", dated March 5, 1998.

          1.   Pursuant to (i) the Sale and Servicing Agreement dated as of
December 1, 1999 (the "Sale and Servicing Agreement") among TFC Automobile
Receivables Trust 1999-1 as issuer (the "Issuer"), TFC Receivables Corporation 2
as seller ("TFCRC"), Norwest Bank Minnesota, National Association (individually
"Norwest") as trust collateral agent, backup servicer and P.O. Box owner, The
Finance Company as servicer (the "Servicer"), and Asset Guaranty Insurance
Company as insurer ("AGIC"); (ii) the Insurance and Reimbursement Agreement
dated as of December 1, 1999 (the "Insurance Agreement") among AGIC, the Issuer,
TFCRC, the Servicer and Norwest as trustee, trust collateral agent and back-up
servicer; (iii) the other Basic Documents (as defined under the Sale and
Servicing Agreement); and (iv) the transactions contemplated by the agreements
listed in clauses (i) through (iii) above, the following table shall be used to
define delinquency categories for contracts with monthly Scheduled Payments
("Monthly-Pay Contracts") and contracts with more frequent Scheduled Payments
("Non-monthly-Pay Contracts"):

Monthly-Pay Contracts*       Non-Monthly-Pay Contracts**        Delinquency
(# Months Delinquent)            (# Weeks Delinquent)            Category
------------------------------------------------------------------------------

           0                           0-5                        Current
           1                           6-9                        30
           2                           10-13                      60
           3                           14-17                      90
           4                           18-21                      120
           5                           22-25                      150
           6                           26+                        180+

          2.   In accordance with The Finance Company's customary policy, in
assigning a delinquency category to any contract, a single partial payment of at
least 51% of a Scheduled Payment (a "One-Time Partial Payment") shall prevent
either the characterization of such contract as being in the 30 Delinquency
Category or, in the case of a contract which is in a more advanced Delinquency
Category at the time of the receipt of such One-Time Partial Payment,
progression of the contract to the next higher Delinquency Category.

                                                                       EXHIBIT A

__________________________
*Monthly-Pay contracts (e.g., "Monthly Accounts").

**Non-monthly-Pay contracts (e.g., "Weekly Accounts," "Bi-Weekly Accounts," and
"Semi-Monthly Accounts").

                                       64
<PAGE>

                  FORM OF FINANCIAL GUARANTY INSURANCE POLICY

                                  [Attached]

                                       65
<PAGE>

                                                                       EXHIBIT B

                               CLOSING CHECKLIST

                                  [Attached]

                                       66

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