Document:

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                                                                   Exhibit 10.28

                        INSURANCE AND INDEMNITY AGREEMENT

                                      AMONG

                       FINANCIAL SECURITY ASSURANCE INC.,

                         FINANCIAL PACIFIC LEASING, LLC,

                                       AND

                        FINANCIAL PACIFIC FUNDING II, LLC

                            DATED AS OF JULY 14, 2003

            $70,000,000 2.29% RECEIVABLES-BACKED NOTES, SERIES 2003-A

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                                TABLE OF CONTENTS

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ARTICLE I.            DEFINITIONS......................................................................        2

         Section 1.01          Definitions.............................................................        2

ARTICLE II.           REPRESENTATIONS, WARRANTIES AND COVENANTS........................................        2

         Section 2.01          Representations and Warranties of the Servicer and the Company..........        2

         Section 2.02          Affirmative Covenants of the Servicer and the Company...................        8

         Section 2.03          Negative Covenants of the Servicer and the Company......................       17

ARTICLE III.          THE NOTE POLICY; REIMBURSEMENT; INDEMNIFICATION..................................       19

         Section 3.01          Issuance of the Note Policy.............................................       19

         Section 3.02          Payment of Fees and Premium.............................................       20

         Section 3.03          Reimbursement Obligation................................................       20

         Section 3.04          Indemnification.........................................................       22

                  (d)       Subrogation................................................................       24

ARTICLE IV.           FURTHER AGREEMENTS...............................................................       24

         Section 4.01          Effective Date; Term of Agreement.......................................       24

         Section 4.02          Further Assurances and Corrective Instruments...........................       25

         Section 4.03          Obligation Absolute.....................................................       25

         Section 4.04          Assignments; Reinsurance; Third-Party Rights............................       26

         Section 4.05          Liability of Financial Security.........................................       27

ARTICLE V.            EVENTS OF DEFAULT; REMEDIES......................................................       27

         Section 5.01          Events of Default.......................................................       27

         Section 5.02          Remedies; Waivers.......................................................       31

ARTICLE VI.           MISCELLANEOUS....................................................................       32

         Section 6.01          Amendments, Etc.........................................................       32

         Section 6.02          Notices.................................................................       32

         Section 6.03          Payment Procedure.......................................................       33

         Section 6.04          Severability............................................................       33

         Section 6.05          Governing Law...........................................................       33

         Section 6.06          Consent to Jurisdiction.................................................       34
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                                TABLE OF CONTENTS
                                   (CONTINUED)

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Section 6.07          Consent of Financial Security...........................................       35

Section 6.08          Counterparts............................................................       35

Section 6.09          Trial by Jury Waived....................................................       35

Section 6.10          Limited Liability.......................................................       35

Section 6.11          Entire Agreement........................................................       35
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Appendix I    -   Definitions

Appendix II   -   Conditions Precedent to Issuance of the Note Policy

                                        3

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                        INSURANCE AND INDEMNITY AGREEMENT

                  INSURANCE AND INDEMNITY AGREEMENT, dated as of July 14, 2003,
by and among FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), FINANCIAL
PACIFIC LEASING, LLC (the "Servicer") and FINANCIAL PACIFIC FUNDING II, LLC (the
"Company").

                             INTRODUCTORY STATEMENTS

                  A. On the Closing Date, Westside Funding Corporation will
release its Lien and security interest in the Receivables and certain other
property related thereto pursuant to the Westside Release Letter, and the
Company will simultaneously pledge to the Trustee all of its right, title and
interest in and to the Receivables and such other property related thereto
pursuant to the Indenture.

                  B. In order to refinance its interest in the Receivables and
such other property, the Company will issue the Securities pursuant to the
Indenture. The Servicer has requested that Financial Security issue a financial
guaranty insurance policy guaranteeing certain distributions of the principal of
and interest on the Securities (including any such distributions subsequently
avoided as a preference under applicable bankruptcy law) upon the terms and
subject to the conditions provided herein.

                  C. The Servicer and the Company have entered into, and it is
contemplated that Servicer and/or the Company and/or any other Affiliate of the
Servicer may in the future enter into, one or more acquisition agreements,
pooling and servicing agreements, servicing agreements, receivables purchase
agreements, indentures or other financing documents (each a "Securitization
Agreement") pursuant to which the Servicer and/or the Company and/or such other
Affiliate of the Servicer has sold, pledged or otherwise transferred, and will
sell, pledge or otherwise transfer, all or a portion of its right, title and
interest in and to pools of contracts and/or other financial assets or property
to a trust or other Person and in connection therewith Financial Security has
issued policies, or in its discretion may in the future issue additional
policies, in each case with respect to certain guaranteed distributions or
scheduled payments with respect to the corresponding securities, certificates,
notes or other obligations issued or arising under such Securitization
Agreements.

                  D. The parties hereto desire to specify the conditions
precedent to the issuance of the Note Policy, the terms of payment of premium in
respect of the Note Policy, the indemnity and reimbursement to be provided to
Financial Security in respect of amounts paid by Financial Security under the
Note Policy or otherwise and certain other matters.

                  In consideration of the premises and of the agreements herein
contained, Financial Security, the Servicer and the Company hereby agree as
follows:

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                                   ARTICLE I.

                                   DEFINITIONS

                  SECTION 1.01 Definitions. Capitalized terms used herein shall
have the meanings provided in Appendix I hereto unless the context otherwise
requires. Unless defined in this Insurance Agreement, all terms defined in the
Indenture or in the Spread Account Agreement shall have the same meanings in
this Insurance Agreement. Unless otherwise specified, if a word or phrase
defined in the Indenture or in the Spread Account Agreement can be applied with
respect to one or more Series, such a word or phrase shall be used herein as
applied to Series 2003-A.

                                   ARTICLE II.

                    REPRESENTATIONS, WARRANTIES AND COVENANTS

                  SECTION 2.01 Representations and Warranties of the Servicer
and the Company. The Servicer represents, warrants and covenants, as of the date
hereof and as of the Date of Issuance, with respect to itself, with respect to
the Company and otherwise, as follows, and the Company represents, warrants and
covenants, as of the date hereof and as of the Date of Issuance, with respect to
itself and otherwise, as follows:

                  (a) Due Organization and Qualification. The Servicer is a
         Washington limited liability company, duly organized, validly existing
         and in good standing under the laws of Washington. The Company is a
         Delaware limited liability company, duly organized, validly existing
         and in good standing under the laws of Delaware. Each of the Servicer
         and the Company 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 respective 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 unenforceable in any respect or would otherwise have a
         material adverse effect upon the Transaction.

                  (b) Power and Authority. Each of the Servicer and the Company
         has all necessary 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 to consummate the Transaction.

                  (c) Due Authorization. The execution, delivery and performance
         of the Transaction Documents by each of the Servicer and the Company
         have been duly authorized by all necessary 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, the Servicer's members or the Company's members.

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                  (d) Noncontravention. None of the execution and delivery of
         the Transaction Documents by the Servicer or by the Company, the
         consummation of the transactions contemplated thereby or the
         satisfaction of the terms and conditions of the Transaction Documents:

                           (i) conflicts with or results in any breach or
                  violation of any provision of the certificate of formation or
                  the limited liability company agreement of the Servicer or of
                  the Company, or any law, rule, regulation, order, writ,
                  judgment, injunction, decree, determination or award currently
                  in effect having applicability to the Servicer or the Company,
                  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
                  the Servicer or the Company, as the case may be;

                           (ii) constitutes a default by the Servicer or the
                  Company, as the case may be, under or a breach of any
                  provision of any loan agreement, mortgage, indenture or other
                  agreement or instrument to which the Servicer or the Company,
                  as the case may be, or any of their respective Subsidiaries or
                  Affiliates 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 the Servicer or the
                  Company or any of their respective Subsidiaries or Affiliates
                  except as otherwise expressly contemplated by the Transaction
                  Documents.

                  (e) Legal Proceedings. There is no action, proceeding or
         investigation, by or before any court, governmental or administrative
         agency or arbitrator against or affecting all or any of the
         Receivables, the Servicer or the Company or any of their respective
         Subsidiaries or Affiliates, or any properties or rights of the Servicer
         or the Company or any of their respective Subsidiaries or Affiliates,
         pending or to the knowledge of the Servicer or the Company, threatened,
         which, in any case, if decided adversely, has a material possibility of
         resulting in a Material Adverse Change with respect to the Servicer or
         the Company or the Receivables.

                  (f) Valid and Binding Obligations. Each of the Transaction
         Documents to which the Servicer or the Company is a party when executed
         and delivered by the Servicer or by the Company, 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 Securities, when
         executed, authenticated and delivered in accordance with the Indenture,
         will be validly issued and outstanding and entitled to the benefits of
         the Indenture and will be valid and binding obligations of the Company.

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                  (g) Financial Statements. The Financial Statements of each of
         the Servicer and the Company, copies of which have been furnished to
         Financial Security (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 each of the Servicer and the Company as of the dates and for the
         periods indicated and (iii) have been prepared in accordance with
         generally accepted accounting principles consistently applied, except
         as noted therein (subject as to interim statements to normal year-end
         adjustments). Since the date of the most recent Financial Statements,
         there has been no Material Adverse Change in such financial condition
         or results of operations. Except as disclosed in the Financial
         Statements, none of the Servicer or the Company is subject to any
         contingent liabilities or commitments that, individually or in the
         aggregate, have a material possibility of causing a Material Adverse
         Change in respect of the Servicer or the Company, as the case may be.

                  (h) ERISA. Each of the Servicer and the Company 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 or with respect to the Company, to
         contribute now or in the future in respect of any Plan or Multiemployer
         Plan.

                  (i) Accuracy of Information. None of (i) the Transaction
         Documents or (ii) the other Provided Documents provided by the Servicer
         or the Company contain any statement of a material fact with respect to
         the Servicer, the Company or the Transaction that was untrue or
         misleading in any material respect when made. Since the furnishing of
         such Provided Documents, there has been no change, nor any development
         or event involving a prospective change known to the Servicer or to the
         Company, that would render any of the Provided Documents untrue or
         misleading in any material respect. There is no fact known to the
         Servicer or to the Company which has a material possibility of causing
         a Material Adverse Change with respect to the Servicer or the Company
         or the Receivables.

                  (j) Compliance With Securities Laws. The offer and sale of the
         Securities comply in all material respects with all requirements of
         law, including all applicable registration requirements of securities
         laws. Without limitation of the foregoing, the Servicer Information
         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. Neither the
         Company nor the Collateral is required to be registered as an
         "investment company" under the Investment Company Act. The Indenture is
         not required to be qualified under the Trust Indenture Act.

                  (k) Transaction Documents. Each of the representations and
         warranties of the Servicer and the Company contained in the Transaction
         Documents is true and correct in all material respects and each of the
         Servicer and the Company hereby

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         makes each such representation and warranty made by it (and the
         Servicer restates each representation and warranty of the Company) to,
         and for the benefit of, Financial Security as if the same were set
         forth in full herein.

                  (l) 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 the Servicer
         or by the Company of this Insurance Agreement or any other Transaction
         Document to which such Person is a party, except (in each case) such as
         have been obtained and are in full force and effect.

                  (m) Compliance With Law, Etc. No practice, procedure or policy
         employed or proposed to be employed by the Servicer or by the Company
         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 or the Receivables.

                  (n) Special Purpose Entity.

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

                           (ii) Other than with respect to the ownership by the
                  Servicer of the limited liability company interests of the
                  Company and the transactions as provided in the Transaction
                  Documents, the Company is not engaged in any business
                  transactions with the Servicer or any of its Subsidiaries or
                  Affiliates other than those transactions being assigned or
                  terminated upon the Closing of the Transaction.

                           (iii) At least two managers of the Company shall each
                  be a Person who is not, and will not be, a director, officer,
                  employee or holder of any equity securities of the Servicer or
                  any of its Affiliates.

                           (iv) The Company's funds and assets are not, and will
                  not be, commingled with the funds of any other Person, except
                  as contemplated by the Transaction Documents.

                           (v) The limited liability company agreement or the
                  certificate of formation of the Company 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
                  members and board of managers.

                  (o) Solvency; Fraudulent Conveyance. Each of the Servicer and
         the Company is solvent (which with respect to Servicer is after taking
         into account

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         advances and loans from its Affiliates (other than Subsidiaries of the
         Servicer) to the Servicer) and will not be rendered insolvent by the
         Transaction and, after giving effect to such Transaction, neither the
         Servicer nor the Company will be left with an unreasonably small amount
         of capital with which to engage in its business. Neither the Servicer
         nor the Company intends to incur, or believes that it has incurred,
         debts beyond its ability to pay such debts as they mature. Neither the
         Servicer nor the Company is contemplating the commencement of
         insolvency, bankruptcy, liquidation or consolidation proceedings or the
         appointment of a receiver, liquidator, conservator, trustee or similar
         official in respect of the Servicer or the Company, as the case may be,
         or any of their respective assets. Neither the Servicer nor the Company
         has had a judgment entered against it that has been returned
         unsatisfied. The amount of consideration being received by the Servicer
         upon the sale of the Receivables and the related Purchased Assets being
         sold by the Servicer to the Company constitutes reasonably equivalent
         value and fair consideration to the Servicer for such Receivables and
         Purchased Assets. The amount of consideration being received by the
         Company upon the sale of the Receivables and the related Receivables
         and the Other Conveyed Property being pledged by the Company to the
         Trustee constitutes reasonably equivalent value and fair consideration
         to the Company for such Receivables and such Receivables and the Other
         Conveyed Property. The Servicer is not transferring the Receivables and
         such related Purchased Assets to the Company, as provided in the
         Transaction Documents, with any intent to hinder, delay or defraud any
         of the Servicer's creditors.

                  (p) Capital Structure. The limited liability company interests
         of the Company which have been pledged pursuant to the Pledge Agreement
         constitute all of the issued and outstanding equity member interests in
         the Company.

                  (q) Investment Company Act Compliance. Neither the Servicer
         nor the Company is required to be registered as an "investment company"
         under the Investment Company Act. Neither the Servicer nor the Company
         is subject to the information reporting requirements of the Securities
         Exchange Act.

                  (r) Good Title; Valid Transfer; Absence of Liens; Security
         Interest.

                           (i) Immediately prior to the transfer of the
                  Purchased Assets by the Servicer to the Company pursuant to
                  the Acquisition Agreement, the Servicer was the owner of, and
                  had good and marketable title to, the Purchased Assets
                  conveyed by the Servicer to the Company on such date free and
                  clear of all Liens and Restrictions on Transferability, and
                  had full right, power and lawful authority to assign, transfer
                  and pledge such Purchased Assets pursuant to the terms of the
                  Acquisition Agreement. The conveyance of Purchased Assets
                  under the Acquisition Agreement, constitutes a valid sale,
                  transfer and assignment of such Purchased Assets by the
                  Servicer to the Company, enforceable against the creditors of
                  and purchasers of the Servicer. In the event that, in
                  contravention of the

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                  intention of the parties, the transfer by the Servicer of such
                  Purchased Assets to the Company is characterized as other than
                  a sale or absolute conveyance, such transfer shall be
                  characterized as a secured financing, and the Company shall
                  have a valid and perfected first priority security interest in
                  such Purchased Assets free and clear of all Liens and
                  Restrictions on Transferability (except that no filings have
                  been made against the related Customer to perfect the
                  Servicer's security interest in any Equipment subject to a
                  Contract characterized by the Servicer as a true lease and
                  having an initial cost of less than $15,000).

                           (ii) Immediately prior to each pledge of the
                  Receivables and the Other Conveyed Property to the Trustee
                  pursuant to the Indenture on each Funding Date, the Company
                  was the owner of, and had good and marketable title to, such
                  property free and clear of all Liens and Restrictions on
                  Transferability (other than the Lien of the Indenture), and
                  had full right, power and lawful authority to pledge such
                  Receivables and the Other Conveyed Property pursuant to the
                  terms of the Indenture. The pledge of Receivables and the
                  Other Conveyed Property under the Indenture constitutes a
                  valid pledge, of such Receivables and the Other Conveyed
                  Property to the Trustee, enforceable against creditors of and
                  purchasers of the Company. The Trustee shall have a valid and
                  perfected first priority security interest in such Receivables
                  and the Other Conveyed Property free and clear of all Liens
                  and Restrictions on Transferability (except that no filings
                  have been made against the related Customer to perfect the
                  Servicer's security interest in any Equipment subject to a
                  Contract characterized by the Servicer as a true lease and
                  having an initial cost of less than $15,000).

                  (s) Perfection of Liens and Security Interest. On or prior to
         each sale of Receivables and the Purchased Assets pursuant to the
         Acquisition Agreement or each pledge of Receivables and other
         Collateral pursuant to the Indenture, the assignment to, or the Lien
         and security interest in favor of, the Trustee with respect to the
         related Receivables and the Purchased Assets will be perfected by (A)
         the delivery of the Contract Files for the related Receivables to the
         Trustee, (B) the filing of financing statements on Form UCC-1 in each
         jurisdiction where such recording or filing is necessary for the
         perfection thereof (except that no filings have been made against the
         related Customer to perfect the Servicer's security interest in any
         Equipment subject to a Contract characterized by the Servicer as a true
         lease and having an initial cost of less than $15,000), (C) the
         delivery to the Trustee of the Westside Release Letter with respect to
         the Receivables, effecting the release of the Lien and security
         interest and/or ownership interest of Westside in the related
         Receivables and the other Purchased Assets related thereto, as
         applicable, and (D) the filing of financing statements on Form UCC-2 or
         UCC-3 in each jurisdiction where such recording or filing is necessary
         for the release by Westside of its Lien and security interest and/or

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         ownership interest, if any, in the related Receivables and the other
         Purchased Assets related thereto, provided that such financing
         statements on Form UCC-2 or UCC-3 may be filed no later than the
         Closing Date, and no other filings in any jurisdiction or any other
         actions (except as expressly provided herein) are necessary to perfect
         the Trustee's first priority Lien on and security interest in the
         Receivables and the Other Conveyed Property as against third parties.

                  (t) Security Interest in Funds and Investments. Assuming the
         retention of funds in the Trust Accounts and the acquisition of
         Eligible Investments in accordance with the Transaction Documents, such
         funds and Eligible Investments will be subject to a valid and
         perfected, first priority security interest in favor of the Trustee.
         Assuming the retention of funds in the Spread Account and the
         acquisition of Eligible Investments in accordance with the Spread
         Account Agreement, such funds and Eligible Investments will be subject
         to a valid and perfected, first priority security interest in favor of
         the Collateral Agent on behalf of Financial Security.

                  (u) Taxes. Each of the Servicer and the Company, and each of
         their respective Subsidiaries, has filed all Federal and state tax
         returns which are required to be filed and paid all taxes, including
         any assessments received by it, to the extent that such taxes have
         become due. Any taxes, fees and other governmental charges payable by
         the Servicer and the Company in connection with the Transaction, the
         execution and delivery of the Transaction Documents and the issuance of
         the Securities have been paid or shall have been paid at or prior to
         the Date of Issuance and as of each Funding Date.

                  (v) Form of Lease. All Contracts with respect to Series 2003-A
         have been originated on the form of lease provided to Financial
         Security by the Servicer.

                  (w) Electronic File provided to Financial Security. The
         information contained in the "Final Portfolio Data - 5-31-03.xls" and
         "Final Portfolio Payment Schedule - 5-31-03.xls" provided to Financial
         Security by the Servicer on June 2, 2003 is true and correct in all
         respects.

                  SECTION 2.02 Affirmative Covenants of the Servicer and the
Company. The Servicer hereby agrees with respect to itself and with respect to
the Company, and the Company hereby agrees with respect to itself, that during
the Term of the Insurance Agreement, unless Financial Security shall otherwise
expressly consent in writing:

                  (a) Compliance With Agreements and Applicable Laws. Each of
         the Servicer and the Company shall perform each of its respective
         obligations under the Transaction Documents and shall comply with all
         material requirements of, and the Securities shall be offered and sold
         in accordance with, any law, rule or regulation applicable to it or
         thereto, or that are required in connection with its performance under
         any of the Transaction Documents.

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<PAGE>

                  (b) Financial Statements; Accountants' Reports; Other
         Information. Each of the Servicer and the Company shall keep or cause
         to be kept in reasonable detail books and records of account of its
         assets and business and, in the case of the Servicer, shall clearly
         reflect therein the transfer of the Receivables and the other Purchased
         Assets to the Company and, in the case of the Company, shall clearly
         reflect therein the transfer of the Receivables and the Other Conveyed
         Property to the Trustee. The Servicer shall furnish or cause to be
         furnished to Financial Security:

                           (i) Annual Financial Statements. As soon as
                  available, and in any event within 120 days after the close of
                  each fiscal year of Financial Pacific Company, the
                  consolidated balance sheet as of the end of such fiscal year
                  and the related consolidated statements of operations,
                  stockholders' equity, and cash flows of Financial Pacific
                  Company and its Subsidiaries 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, and the supplemental consolidating
                  schedules (balance sheet and the statement of operations) for
                  such fiscal year, prepared in conformity with accounting
                  principles generally accepted in the United States of America,
                  and accompanied by an opinion of Financial Pacific Company's
                  independent accountants (who shall be, in each case, a
                  nationally recognized firm or otherwise acceptable to
                  Financial Security) and by the certificate specified in
                  Section 2.02 (c) hereof.

                           (ii) Quarterly Financial Statements. As soon as
                  available, and in any event within 60 days after the close of
                  each of the first three quarters of each fiscal year of
                  Financial Pacific Company, the unaudited consolidated balance
                  sheet as of the end of such quarter and the related unaudited
                  consolidated statements of operations, stockholders' equity,
                  and cash flows of Financial Pacific Company and its
                  Subsidiaries for such quarter, all in reasonable detail, and
                  the supplemental consolidating schedules (balance sheet and
                  the statement of operations) for such quarter, prepared in
                  conformity with accounting principles generally accepted in
                  the United States of America (subject to normal year-end
                  adjustments), and accompanied by the certificate specified in
                  Section 2.02 (c) hereof if such certificate is required to be
                  provided pursuant to such Section.

                           (iii) Accountants' Reports. If a Special Event has
                  occurred, copies of any reports submitted to the Servicer and
                  the Company by their respective independent accountants in
                  connection with any examination of the financial statements of
                  Financial Pacific Company, promptly upon receipt thereof. The
                  Servicer shall use its best efforts to assist Financial
                  Security in obtaining a copy of the report on conditions
                  required by the independent accountants.

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                           (iv) Other Information. Promptly upon receipt
                  thereof, copies of all reports, statements, certifications,
                  schedules, or other similar items delivered to or by the
                  Servicer or the Company pursuant to the terms of the
                  Transaction Documents and, promptly upon request, such other
                  data as Financial Security may reasonably request. The
                  Servicer and the Company shall, upon the request of Financial
                  Security, permit Financial Security or its authorized agents
                  (A) to inspect the books and records of the Servicer and the
                  Company as they may relate to the Securities and the
                  Receivables and the Other Conveyed Property, the obligations
                  of the Servicer or of the Company under the Transaction
                  Documents, the Transaction and, but only following the
                  occurrence of a Special Event, the Servicer's and the
                  Company's respective businesses; (B) to discuss the affairs,
                  finances and accounts of the Servicer or the Company with
                  their respective Chief Operating Officer and Chief Financial
                  Officer (or a Responsible Officer with responsibilities and
                  functions equivalent thereto), no more frequently than
                  annually, unless a Special Event has occurred; and (C) to
                  discuss the affairs, finances and accounts of the Servicer or
                  of the Company with its independent accountants. Such
                  inspections and discussions shall be conducted during normal
                  business hours and shall not unreasonably disrupt the business
                  of the Servicer or the Company, as the case may be. In
                  addition, each of the Servicer and the Company shall promptly
                  (and in any case within three Business Days) provide to
                  Financial Security 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 underfunded status, termination
                  or possible termination of a Plan or a Multiemployer Plan. The
                  books and records of the Servicer and the Company will be
                  maintained at the respective addresses designated herein for
                  receipt of notices, unless the Servicer or the Company shall
                  otherwise advise the parties hereto in writing.

                           (v) Executed Originals. The Servicer shall provide or
                  cause to be provided to Financial Security an executed
                  original copy of each document executed in connection with the
                  Transaction within 30 days after the Closing Date.

                           (vi) Additional Documents. Subject to clause (k) of
                  this Section 2.02, promptly after the filing or sending
                  thereof, copies of all proxy statements, financial statements,
                  reports and registration statements which the Servicer or the
                  Company files, or delivers to, the IRS, the Commission, or any
                  other Federal, state or foreign government agency, authority
                  or body which supervises the issuance of securities by the
                  Servicer and the Company or any national securities exchange.

                  (c) Compliance Certificate. The Servicer shall deliver to
         Financial Security concurrently with the delivery of the financial
         statements required

                                       10
<PAGE>

         pursuant to Section 2.02(b)(i) hereof and concurrently with the
         delivery of the financial statements required pursuant to Section
         2.02(b)(ii) hereof, a certificate signed by the Chief Financial Officer
         (or a Responsible Officer with responsibilities and functions
         equivalent thereto) of Financial Pacific Company stating that:

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

                           (ii) to the best of such individual's knowledge, no
                  Special Event, Default or Event of Default has occurred, or if
                  a Special Event, Default or Event of Default has occurred,
                  specifying the nature thereof and, if the Servicer or the
                  Company has a right to cure any such Default or Event of
                  Default pursuant to Section 5.01, stating in reasonable detail
                  the steps, if any, being taken by the Servicer or the Company,
                  as the case may be, to cure such Default or Event of Default
                  or to otherwise comply with the terms of the agreement to
                  which such Default or Event of Default relates; and

                           (iii) the attached financial reports submitted in
                  accordance with Section 2.02(b)(i) or (ii) hereof, as
                  applicable, are complete and correct in all material respects
                  and present fairly the financial position and results of
                  operations of Financial Pacific Company, as of the dates and
                  for the periods indicated, in accordance with generally
                  accepted accounting principles consistently applied (subject
                  as to interim statements to normal year-end adjustments).

                  (d) Notice of Material Events. Each of the Servicer and the
         Company shall promptly inform Financial Security 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 the Servicer or the Company
                  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);

                           (ii) any change in the location of the Servicer's or
                  the Company's principal office or any change in the location
                  of the Servicer's or the Company's books and records;

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

                                       11
<PAGE>

                           (iv) any other event, circumstance or condition that
                  has resulted, or has a material possibility of resulting, in a
                  Material Adverse Change in respect of the Servicer or the
                  Company.

                  (e) Further Assurances. Each of the Servicer and the Company
         will file or cause to be filed 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 first priority security interest in, and
         all rights of the Trustee with respect to the Receivables and the Other
         Conveyed Property, under the Indenture, including, without limitation,
         any actions which may be necessitated by the adoption of revisions to
         Article 9 of UCC. In addition, each of Servicer and the Company shall,
         upon the request of Financial Security, from time to time, execute,
         acknowledge and deliver, or cause to be executed, acknowledged and
         delivered, within ten (10) days of such request, such amendments hereto
         and such further instruments and take such further action as may be
         reasonably necessary to effectuate the intention, performance and
         provisions of the Transaction Documents or to protect the interest of
         the Trustee, in the Receivables and the Other Conveyed Property, free
         and clear of all Liens and Restrictions on Transferability. In
         addition, each of the Servicer and the Company agrees to cooperate with
         S&P and Moody's in connection with any review of the Transaction which
         may be undertaken by S&P and Moody's after the date hereof.

                  (f) Retirement of Securities. The Servicer or the Company
         shall cause the Trustee, upon retirement of the Securities pursuant to
         the Indenture or otherwise, to furnish to Financial Security a notice
         of such retirement, and, upon retirement of the Securities and the
         expiration of the term of the Note Policy, to surrender the Note Policy
         to Financial Security for cancellation.

                  (g) Third-Party Beneficiary. Each of the Servicer and the
         Company agrees that Financial Security shall have all rights of a
         third-party beneficiary in respect of the Servicing Agreement, the Note
         Purchase Agreement, the Acquisition Agreement, the Lockbox Agreement,
         the Indenture, the Westside Release Letter and any other Transaction
         Document to which either of Servicer or the Company is a party and
         hereby incorporates and restates its representations, warranties and
         covenants as set forth therein for the benefit of Financial Security.

                  (h) Corporate Existence. Each of the Servicer and the Company
         shall maintain its respective limited liability company existence and
         shall at all times continue to be duly organized under the laws of its
         jurisdiction of incorporation or organization and continue to be duly
         qualified and duly authorized (as described in Sections 2.01(a), (b)
         and (c) hereof) and shall conduct its business in accordance with the
         terms of its respective certificate of formation and limited liability
         company agreement or other applicable governing documents.

                                       12
<PAGE>

                  (i) Disclosure Document.

                                    (1) Each Offering Document shall clearly
                           disclose that the Note 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 which includes
                           financial statements of Financial Security prepared
                           in accordance with generally accepted accounting
                           principles 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 whether
                                    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 generally
                                    accepted accounting principles in making
                                    such determinations.

                                    (2) Each Offering Document delivered
                           subsequent to the Date of Issuance shall be in form
                           and substance satisfactory to Financial Security in
                           its sole discretion as evidenced by Financial
                           Security's prior written consent to the use thereof.

                  (j) Special Purpose Entity.

                           (i) The Company 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 officers are concerned, and particularly will
                  avoid the appearance of conducting business on behalf of the
                  Servicer or any Affiliate thereof or that the assets of the
                  Company are available to pay the creditors of the Servicer or
                  any Affiliate 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 Company.

                           (ii) The Company shall maintain corporate records and
                  books of account separate from those of the Servicer and the
                  Affiliates thereof. The books of account and corporate records
                  of the Company will be

                                       13
<PAGE>

                  separate from those of the Servicer and its Affiliates and
                  will be maintained at the address designated herein for
                  receipt of notices, unless the Company shall otherwise advise
                  the parties hereto in writing.

                           (iii) The Company shall obtain proper authorization
                  from its board of managers of all company actions requiring
                  such authorization. Meetings of the board of managers will be
                  held at least once per annum and copies of the minutes of each
                  such board meeting shall be delivered to Financial Security
                  within 30 days of such meeting.

                           (iv) The Company shall obtain proper authorization
                  from its members of all company action requiring member
                  approval. Meetings of the members of the Company shall be held
                  not less frequently than one time per annum and copies of each
                  such authorization and the minutes of each such member meeting
                  as well as any consents in lieu of a meeting shall be
                  delivered to Financial Security within 30 days of such
                  authorization or meeting, as the case may be.

                           (v) Although the organizational expenses of the
                  Company have been paid by the Servicer, operating expenses and
                  liabilities of the Company shall be paid from its own funds.

                           (vi) The annual financial statements of Financial
                  Pacific Company shall disclose the effects of the Company's
                  transactions in accordance with generally accepted accounting
                  principles and shall disclose that the assets of the Company
                  are not available to pay creditors of the Servicer or any
                  Affiliate thereof.

                           (vii) The resolutions, agreements and other
                  instruments of the Company underlying the transactions
                  described in this Insurance Agreement and the other
                  Transaction Documents shall be continuously maintained by the
                  Company as official records of the Company separately
                  identified and held apart from the records of the Servicer and
                  each Affiliate thereof.

                           (viii) The Company shall maintain an arm's-length
                  relationship with the Servicer and the Affiliates thereof and
                  will not hold itself out as being liable for the debts of the
                  Servicer or any Affiliate thereof.

                           (ix) The Company shall keep its assets and its
                  liabilities wholly separate from those of all other entities,
                  including, but not limited to the Servicer and the Affiliates
                  thereof.

                  (k) Maintenance of Licenses. Each of the Servicer and the
         Company shall maintain all licenses, permits, charters and
         registrations which are material to the performance by any of the
         Servicer and the Company of its business or of its

                                       14
<PAGE>

         respective obligations under this Insurance Agreement and each other
         Transaction Document.

                  (l) Registration Statements for the Securities. Each of the
         Servicer and the Company shall (i) provide Financial Security with
         written notice at least 30 days prior to the filing of any registration
         statement relating to the Securities, (ii) provide Financial Security
         with a copy of such registration statement to be filed at least 15 days
         prior to such filing, (iii) prior to such filing, obtain the written
         consent of Financial Security with respect to the filing of such
         registration statement and (iv) provide Financial Security with any
         opinions of counsel as Financial Security may request in connection
         with the registration of the Securities under the Securities Act, which
         opinions shall be addressed to Financial Security and shall be in form
         and substance satisfactory to Financial Security.

                  (m) Notification of Failure to Perform or Observe Certain
         Covenants or Agreements. The Company shall promptly deliver to the
         Servicer a copy of any written notice delivered to the Company pursuant
         to Section 5.01(d) concerning any failure to perform or observe any
         covenant or agreement contained in any of the Transaction Documents by
         the Servicer.

                  (n) Securities Laws. The Servicer and the Company 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.

                  (o) Insurance Policies. The Servicer shall maintain and
         enforce the Insurance Policies in an amount of $1 million and $8
         million, respectively, until the Stated Maturity Date. The Servicer
         shall also add the Company and the Trustee as an insured party and a
         loss payee under such Insurance Policies. If at any time the rating of
         any insurer under an Insurance Policy is withdrawn or reduced, the
         Servicer shall obtain and maintain in force a replacement policy or
         policies with insurer(s) rated at least "A" and otherwise acceptable to
         Financial Security.

                  (p) Notice of Suits. The Servicer and the Company shall notify
         Financial Security promptly upon receiving notice of the commencement
         or threat of any suit or other proceeding against the Company relating
         to liability for any accident involving vehicles owned, leased or
         financed by the Company.

                  (q) Financial Covenants. The following financial covenants
         shall be complied with and shall be measured on a quarterly basis:

                           (i) The Servicer and its consolidated Subsidiaries
                  shall maintain a minimum level of adjusted earnings (before
                  interest, income taxes, depreciation and amortization) to
                  interest coverage of 1.4 on a rolling four

                                       15
<PAGE>

                  quarter basis, beginning with the fiscal quarter ending
                  September 30, 2003. In calculating interest coverage, interest
                  expense shall include interest of the Servicer and its
                  consolidated Subsidiaries, as well as interest accruing on the
                  subordinated debt of Financial Pacific Company. Amortization
                  shall not include amortization of capitalized initial direct
                  costs incurred in originating leases.

                           (ii) The Servicer and its consolidated Subsidiaries
                  shall maintain a ratio, on a consolidated basis, of adjusted
                  total debt to adjusted consolidated Tangible Net Worth not to
                  exceed 16 to 1 calculated quarterly beginning September 30,
                  2003; 15 to 1 calculated quarterly beginning December 31,
                  2003; 14 to 1 calculated quarterly beginning December 31,
                  2004; and 13 to 1 calculated quarterly beginning December 31,
                  2005. Adjusted total debt shall include only consolidated
                  interest-bearing debt, plus (a) 50% of Financial Pacific
                  Company's subordinated debt having a maturity of five years or
                  more, and (b) 100% of Financial Pacific Company's subordinated
                  debt having a maturity of less than five years. Adjusted
                  consolidated Tangible Net Worth shall include the consolidated
                  Tangible Net Worth, less (a) 50% of Financial Pacific
                  Company's subordinated debt having a maturity of five years or
                  more, and (b) 100% of Financial Pacific Company's subordinated
                  debt having a maturity of less than five years.

                           (iii) The Servicer shall not incur a net loss in
                  excess of $100,000 for any quarterly period.

                           (iv) The Servicer shall maintain not less than $15.0
                  million in available debt under other financial facilities,
                  provided, however, that (A) such other financing facilities
                  shall, in the aggregate, equal at least $35.0 million, (B)
                  such other financing facilities are extended by lenders that
                  are not Affiliates of the Servicer and (C) no event or
                  circumstance has occurred and is continuing that would prevent
                  the Servicer from obtaining funding under such other financing
                  facilities in an amount of up to $35.0 million.

                           (v) The Servicer and its consolidated Subsidiaries
                  (except Financial Pacific Funding, LLC, Financial Pacific
                  Funding III, LLC and the Company) shall maintain a ratio, on a
                  consolidated basis, of Indebtedness to Tangible Net Worth not
                  to exceed 8 to 1 calculated quarterly beginning September 30,
                  2003.

                  (r) Lockbox. The Servicer will direct the obligors of the
         Contracts to make payments to the Lockbox in accordance with the
         Lockbox Agreement.

                  (s) Notice of Default. In the event any notice is delivered to
         the Company under Section 5.01(d) concerning a failure in the
         performance or observance of

                                       16
<PAGE>

         any covenant or agreement on the part of the Servicer, the Company
         shall immediately deliver such notice to the Servicer and Financial
         Security.

                  SECTION 2.03 Negative Covenants of the Servicer and the
Company. The Servicer hereby agrees with respect to itself, and with respect to
the Company, and the Company hereby agrees with respect to itself, that during
the Term of the Insurance Agreement, unless Financial Security shall otherwise
expressly consent in writing:

                  (a) Restrictions on Liens. Neither the Servicer nor the
         Company shall (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
         on the Receivables and the Other Conveyed Property except for the Lien
         in favor of the Trustee, and the Restrictions on Transferability
         imposed by the Indenture or (ii) with respect to the Receivables and
         the Other Conveyed Property, sign or file under the Uniform Commercial
         Code of any jurisdiction any financing statement which names either the
         Servicer or the Company as a debtor, or sign any security agreement
         authorizing any secured party thereunder to file such financing
         statement, except in each case any such instrument solely securing the
         rights and preserving the Lien of the Trustee under the Indenture.

                  (b) Impairment of Rights. Neither the Servicer nor the Company
         shall take any action, or fail to take any action, if such action or
         failure to take action may (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 holders of the Securities
         or Financial Security, (ii) result in a Material Adverse Change in
         respect of the Receivables and the Other Conveyed Property or (iii)
         impair the ability of the Servicer or the Company to perform its
         obligations under the Transaction Documents, including any
         consolidation or merger with any Person or any transfer of all or any
         material amount of the Servicer's or the Company's assets to any other
         Person if such consolidation, merger or transfer would materially
         impair the net worth of the Servicer or the Company or any successor
         Person obligated, after such event, to perform the Servicer's or the
         Company's obligations under the Transaction Documents.

                  (c) Waiver, Amendments, Etc. Neither the Servicer nor the
         Company shall waive, modify or amend, or consent to any waiver,
         modification or amendment of, any of the provisions of any of the
         Transaction Documents or, if applicable, the Company's certificate of
         formation or limited liability company agreement unless Financial
         Security shall have consented thereto in writing.

                  (d) Successors. Neither the Servicer nor the Company shall
         terminate or designate, or consent to the termination or designation
         of, the Servicer, the Back-up Servicer, the Trustee or Collateral Agent
         or any successor thereto without the prior written approval of
         Financial Security.

                                       17
<PAGE>

                  (e) Creation of Indebtedness; Guarantees. The Company shall
         not create, incur, assume or suffer to exist any indebtedness other
         than the Securities and any other indebtedness guaranteed or approved
         in writing by Financial Security. Without the prior written consent of
         Financial Security, the Company 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.

                  (f) Subsidiaries. The Company shall not form, or cause to be
         formed, any Subsidiaries.

                  (g) Issuance of Member Interests. The Company shall not issue
         or allow the issuance of any member interests or rights, warrants or
         options in respect of its member interests, other than the member
         interests which have been pledged to Financial Security in accordance
         with the Pledge Agreement.

                  (h) No Mergers. (a) The Company shall not consolidate with or
         merge into any Person or transfer all or any material portion of its
         assets to any Person or liquidate or dissolve; and (b) Servicer shall
         not consolidate with or merge into any Person or transfer all or any
         material portion of its assets to any Person or liquidate or dissolve
         without the prior written consent of Financial Security.

                  (i) Other Activities. The Company shall not:

                           (i) sell, transfer, exchange or otherwise dispose of
                  any of its assets except as permitted under the Transaction
                  Documents and under its certificate of formation or limited
                  liability company agreement; or

                           (ii) engage in any business or activity other than as
                  contemplated by the Transaction Documents and as permitted
                  under its certificate of formation and limited liability
                  company agreement.

                  (j) Insolvency. Neither the Servicer nor the Company shall
         commence with respect to the Company 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 of its assets, or make a
         general assignment for the benefit of its creditors. Neither the
         Servicer nor the Company shall take any action in furtherance of, or
         indicating the consent to, approval of, or acquiescence in any of the
         acts set forth above. The Company shall not admit in writing its
         inability to pay its debts.

                                       18
<PAGE>

                  (k) ERISA. The Company shall not contribute or incur any
         obligation to contribute to, or incur any liability in respect of, any
         Plan or Multiemployer Plan.

                  (l) Dividends. The Company shall not declare or make payment
         of (i) any dividend or other distribution on or in respect of any
         member interests, or (ii) any payment on account of the purchase,
         redemption, retirement or acquisition of any option, warrant or other
         right to acquire shares of its member interests unless (in each case)
         at the time of such declaration or payment (and after giving effect
         thereto) no amount payable by the Servicer or the Company under any
         Transaction Document with respect to any Series is then due and owing
         but unpaid.

                  (m) Release of Liens. Each of the Servicer and the Company
         shall duly file or cause to be duly filed on behalf of Westside and/or
         other relevant parties, (i) in each case no later than the Closing Date
         or each Funding Date, with respect to which Receivables in which
         Westside and/or such other relevant Persons have Liens and security
         interests and/or ownership interests, which Receivables are to be
         conveyed by the Servicer and/or such other Persons to the Company and
         pledged by the Company to the Trustee, UCC financing statements
         evidencing the conveyance by Westside and/or such other Persons of
         their respective interests in such Receivables and certain other
         property related thereto pursuant to the Westside Release Letter and/or
         such other conveyance documents as may be executed in connection
         therewith and (ii) in each case no later than the Closing Date, with
         respect to which Receivables in which Westside and/or any other
         relevant Persons have Liens and security interests, which Receivables
         are to be conveyed by the Servicer to the Company and pledged by the
         Company to the Trustee, the amendments to, and/or termination of, UCC
         financing statements evidencing the release by Westside and/or all
         other relevant Persons of any Liens, security interests and/or
         ownership interests in the Receivables and the Other Conveyed Property,
         which with respect to the Receivables and the Other Conveyed Property
         related thereto shall be the documents that are referred to in clause
         (p) of Appendix II hereof.

                  (n) Lockbox. The Servicer shall not direct any obligor of a
         Contract to make any payments directly to the Servicer.

                                  ARTICLE III.

                 THE NOTE POLICY; REIMBURSEMENT; INDEMNIFICATION

                  SECTION 3.01 Issuance of the Note Policy. Financial Security
agrees to issue the Note Policy subject to satisfaction of the conditions
precedent set forth in Appendix II hereto.

                                       19
<PAGE>

                  SECTION 3.02 Payment of Fees and Premium.

                  (a) Legal Fees. On the Date of Issuance, the Servicer shall
         pay or cause to be paid legal fees and disbursements incurred by
         Financial Security in connection with the issuance of the Note Policy.

                  (b) Rating Agency Fees. The initial fees of S&P and Moody's
         with respect to the Securities and the transactions contemplated hereby
         shall be paid by Servicer in full on the Date of Issuance, or otherwise
         provided for to the satisfaction of Financial Security. All periodic
         and subsequent fees of S&P or Moody's with respect to, and directly
         allocable to, the Securities shall be for the account of, and shall be
         billed to, Servicer. The fees for any other rating agency shall be paid
         by the party requesting such other agency's rating, unless such other
         agency is a substitute for S&P or Moody's in the event that S&P or
         Moody's is no longer rating the Securities, in which case the cost for
         such agency shall be paid by Servicer.

                  (c) Auditors' Fees. In the event that Financial Security's
         auditors are required to provide information or any consent in
         connection with any Offering Document prepared on or prior to the Date
         of Issuance of the Policy, fees therefor shall be paid by the Servicer
         on or prior to such Date of Issuance, or otherwise provided for to the
         satisfaction of Financial Security. The Servicer shall pay on demand
         any additional fees of Financial Security's auditors payable in respect
         of any Offering Document that are incurred after the Date of Issuance.
         It is understood that Financial Security's auditors shall not incur any
         additional fees in respect of future Offering Documents except at the
         request of or with the consent of the Servicer.

                  (d) Premium. In consideration of the issuance by Financial
         Security of the Note Policy, Financial Security shall be entitled to
         receive the Premium as and when due in accordance with the terms of the
         Premium Letter (i) in the case of Premium due on or before the Date of
         Issuance, directly from the Servicer, and (ii) in the case of Premium
         due after the Date of Issuance, from monies available for such payment
         in accordance with Section 12.02(d) of the Indenture. The Premium paid
         hereunder or under the Indenture shall be nonrefundable without regard
         to whether Financial Security makes any payment under the Note Policy
         or any other circumstances relating to the Securities or provision
         being made for payment of the Securities prior to maturity. Although
         the Premium is fully earned by Financial Security as of the Closing
         Date, the Premium shall be payable in periodic installments as provided
         in the Premium Letter. All payments of Premium shall be made by wire
         transfer to an account designated from time to time by Financial
         Security by written notice to the Trustee.

                  SECTION 3.03 Reimbursement Obligation. Notwithstanding any of
the following provisions of this Section 3.03 to the contrary, the payment
obligations set forth in Sections 3.03(a), (b) (other than in respect of amounts
due from the Servicer),(c)

                                       20
<PAGE>

(other than in respect of amounts due from the Servicer) and Section 3.03(d)(vi)
shall be non-recourse obligations with respect to the Servicer and shall be
payable only from monies available for such payment in accordance with Section
12.02(d) of the Indenture (except to the extent that any such payment obligation
(other than the payment obligations set forth in Section 3.03(a) and the payment
obligations set forth in Section 3.03(b) that arise with respect to amounts due
from a Person other than the Servicer) arises from a failure to perform or
default of the Servicer, the Company or any Affiliate thereof under any
Transaction Document or by reason of negligence, willful misconduct or bad faith
on the part of the Servicer, the Company or any Affiliate thereof in the
performance of its duties and obligations thereunder or reckless disregard by
the Servicer, the Company or any Affiliate thereof of its duties and obligations
thereunder). The Servicer and the Company agree to pay to Financial Security the
following amounts as and when incurred:

                  (a) a sum equal to the total of all amounts paid by Financial
         Security under the Note Policy;

                  (b) interest on any and all amounts described in this Section
         3.03 or Section 3.02(d) from the date due to Financial Security
         pursuant to the provisions hereof until payment thereof in full,
         payable to Financial Security at the Late Payment Rate per annum,
         together with interest on overdue interest compounded monthly;

                  (c) any payments made by Financial Security on behalf of, or
         advanced to, the Servicer, in its capacity as the Servicer, Trustee or
         the Collateral Agent, including, without limitation, any amounts
         payable by the Servicer, in its capacity as the Servicer, the Trustee
         or the Collateral Agent pursuant to the Securities or any other
         Transaction Documents; and any payments made by Financial Security as,
         or in lieu of, any servicing, management, trustee, custodial or
         administrative fees payable, in the sole discretion of Financial
         Security to third parties in connection with the Transaction; and

                  (d) any and all out-of-pocket charges, fees, costs and
         expenses which Financial Security or its affiliates may reasonably pay
         or incur, including, but not limited to, attorneys' and accountants'
         fees and expenses, in connection with (i) in the event of payments
         under the Note Policy, any accounts established to facilitate payments
         under the Note Policy, to the extent Financial Security has not been
         immediately reimbursed on the date that any amount is paid by Financial
         Security under the Note Policy, or other administrative expenses
         relating to such payments under the Note Policy, (ii) the prepayment of
         any borrowings made or implementation or cancellation of any financial
         contracts (including, without limitation, interest rate and currency
         swaps or hedges) entered into in connection with, or (following an
         Event of Default hereunder) in anticipation of, funding payments under
         the Policy, (iii) the enforcement, defense or preservation of any
         rights in respect of any of the Transaction Documents, including
         defending, monitoring or participating in any litigation or proceeding
         (including any

                                       21
<PAGE>

         insolvency or bankruptcy proceeding in respect of any Transaction
         participant or any Affiliate thereof) relating to any of the
         Transaction Documents, any party to any of the Transaction Documents or
         the Transaction, (iv) any amendment, waiver or other action with
         respect to, or related to, any Transaction Document whether or not
         executed or completed, (v) any review or investigation made by
         Financial Security in those circumstances where its approval or consent
         is sought under any of the Transaction Documents, (vi) the foreclosure
         against, sale or other disposition of any collateral securing any
         obligations under any of the Transaction Documents or otherwise in the
         discretion of Financial Security, or pursuit of any other remedies
         under any of the Transaction Documents, to the extent such costs and
         expenses are not recovered from such foreclosure, sale or other
         disposition, (vii) any review or approval by Financial Security in
         connection with the delivery of any additional or substitute collateral
         under any of the Transaction Documents, (viii) participation in, or
         monitoring of, any government investigation of, or class action
         involving, any of the Servicer and Company and (ix) any federal, state
         or local tax (other than taxes payable in respect of the gross income
         of Financial Security) or other governmental charge imposed in
         connection with the issuance of the Policy; costs and expenses shall
         include the reasonable fees and expenses charged by Transaction
         Services Corporation, an affiliate of Financial Security, spent in
         connection with the actions described in (iii) above, and Financial
         Security reserves the right to charge a reasonable fee as a condition
         to executing any amendment, waiver or consent proposed in respect of
         any of the Transaction Documents.

All such amounts are to be immediately due and payable without demand, in full,
without any requirement on the part of Financial Security to seek reimbursement
from any other sources of indemnity therefor or to allocate expenses to any
other transactions benefiting therefrom.

                  SECTION 3.04 Indemnification.

                  (a) In addition to any and all rights of reimbursement,
         indemnification, subrogation and any other rights pursuant hereto or
         under law or in equity, each of the Servicer and the Company, jointly
         and severally, agrees to pay, and to protect, indemnify and save
         harmless, Financial Security and its officers, directors, shareholders,
         employees, agents and each Person, if any, who controls Financial
         Security within the meaning of either Section 15 of the Securities Act
         or Section 20 of the Securities Exchange Act from and against any and
         all claims, losses, liabilities (including penalties), actions, suits,
         judgments, demands, damages, costs or expenses (including, without
         limitation, 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:

                                       22
<PAGE>

                           (i) any statement, omission or action (other than of
                  or by Financial Security) in connection with the offering,
                  issuance, sale, remarketing or delivery of the Securities;

                           (ii) the negligence, bad faith, willful misconduct,
                  misfeasance, malfeasance or theft committed by any director,
                  officer, employee or agent of the Servicer or the Company, as
                  the case may be;

                           (iii) the breach by the Servicer or the Company, as
                  the case may be, of any representation, warranty or covenant
                  under any of the Transaction Documents or the occurrence, in
                  respect of the Servicer or the Company, as the case may be,
                  under any of the Transaction Documents of any "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";

                           (iv) the violation by the Servicer or the Company of
                  any Federal, state or foreign law, rule or regulation, or any
                  judgment, order or decree applicable to it; or

                           (v) any untrue statement or alleged untrue statement
                  of a material fact contained in the Offering Document or any
                  omission or alleged omission to state therein a material fact
                  required to be stated therein or necessary to make the
                  statements therein not misleading.

                  (b) Conduct of Actions or Proceedings. If any action or
         proceeding (including any governmental investigation) shall be brought
         or asserted against Financial Security, any officer, director,
         shareholder, employee or agent of Financial Security or any Person
         controlling Financial Security (individually, an "Indemnified Party"
         and, collectively, the "Indemnified Parties") in respect of which
         indemnity may be sought from the Servicer and/or the Company (the
         "Indemnifying Party") hereunder, Financial Security shall promptly
         notify the Indemnifying Party in writing, and the Indemnifying Party
         shall assume the defense thereof, including the employment of counsel
         satisfactory to Financial Security and the payment of all 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 the
         Indemnifying Party if (i) the Indemnifying Party has agreed to pay such
         fees and expenses, (ii) the Indemnifying Party shall have failed to
         assume the defense of such action or proceeding and employ counsel
         satisfactory to Financial Security 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 the
         Indemnifying Party, 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 the
         Indemnifying Party and (B) the representation of the Indemnifying Party
         and the Indemnified Party by the

                                       23
<PAGE>

         same counsel would be inappropriate or contrary to prudent practice (in
         which case, if the Indemnified Party notifies the Indemnifying Party in
         writing that it elects to employ separate counsel at the expense of the
         Indemnifying Party, the Indemnifying Party 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 the Indemnifying
         Party 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 Financial
         Security). The Indemnifying Party 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 the Indemnifying Party 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 the Indemnifying Party shall
         have received notice in accordance with this subsection (b), the
         Indemnifying Party agrees to indemnify and hold the Indemnified Parties
         harmless from and against any loss or liability by reason of such
         settlement or judgment.

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

                  (d) Subrogation. Subject only to the priority of payment
         provisions of the Indenture, each of the Servicer and the Company
         acknowledges that, to the extent of any payment made by Financial
         Security pursuant to the Note Policy, Financial Security is to be fully
         subrogated to the extent of such payment and any additional interest
         due on any late payment, to the rights of the holders of Securities to
         any moneys paid or payable in respect of the Securities under the
         Transaction Documents or otherwise. Each of the Servicer and the
         Company agrees to such subrogation and, further, each of the Servicer
         and the Company agrees to execute such instruments and to take such
         actions as, in the sole judgment of Financial Security, are necessary
         to evidence such subrogation and to perfect the rights of Financial
         Security to receive any moneys paid or payable in respect of the
         Securities under the Transaction Documents or otherwise.

                                  ARTICLE IV.

                               FURTHER AGREEMENTS

                  SECTION 4.01 Effective Date; Term of Agreement. This Insurance
Agreement shall take effect on the Date of Issuance and shall remain in effect
until the

                                       24
<PAGE>

later of (a) such time as Financial Security is no longer subject to a claim
under the Note Policy and the Note Policy shall have been surrendered to
Financial Security for cancellation and (b) all amounts payable to Financial
Security and the holders of the Securities under the Transaction Documents and
under the Securities have been paid in full; provided, however, that the
provisions of Sections 3.02, 3.03, 3.04 and 4.05 hereof shall survive any
termination of this Insurance Agreement.

                  SECTION 4.02 Further Assurances and Corrective Instruments. To
the extent permitted by law, each of the Company and the Servicer agrees that it
will, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements hereto and such further
instruments as Financial Security may reasonably request and as may be required
in Financial Security's reasonable judgment to effectuate the intention of or
facilitate the performance of this Insurance Agreement and the intent of the
parties hereto.

                  SECTION 4.03 Obligation Absolute.

                  (a) The payment obligations of the Servicer and the Company
         hereunder shall be absolute and unconditional, and shall be paid
         strictly in accordance with this Insurance Agreement under all
         circumstances irrespective of the following:

                           (i) any lack of validity or enforceability of, or any
                  amendment or other modifications of, or waiver with respect
                  to, any of the Transaction Documents, the Securities or the
                  Note Policy;

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

                           (iii) the existence of any claim, setoff, defense,
                  reduction, abatement or other right which the Servicer or the
                  Company may have at any time against Financial Security or any
                  other Person;

                           (iv) any document presented in connection with the
                  Note Policy proving to be forged, fraudulent, invalid or
                  insufficient in any respect, including any failure to strictly
                  comply with the terms of the Note Policy, or any statement
                  therein being untrue or inaccurate in any respect;

                           (v) any failure of the Company to receive the
                  proceeds from the sale of the Securities;

                           (vi) any breach by the Servicer or the Company of any
                  representation, warranty or covenant contained in any of the
                  Transaction Documents;

                           (vii) any payment by Financial Security under the
                  Note Policy against presentation of a certificate or other
                  document which does not strictly comply with the terms of the
                  Note Policy; or

                                       25
<PAGE>

                           (viii) any other circumstances, other than payment in
                  full, which might otherwise constitute a defense available to,
                  or discharge of the Servicer or the Company in respect of any
                  Transaction Document.

                  (b) Each of the Servicer and the Company and any and all
         others who are now or may become liable for all or part of the
         obligations of any of them under this Insurance Agreement agree to be
         bound by this Insurance Agreement and (i) to the extent permitted by
         law, waive and renounce any and all redemption and exemption rights and
         the benefit of all valuation and appraisement privileges against the
         indebtedness, if any, and obligations evidenced by any Transaction
         Document or by any extension or renewal thereof; (ii) waive presentment
         and demand for payment, notices of nonpayment and of dishonor, protest
         of dishonor and notice of protest; (iii) waive all notices in
         connection with the delivery and acceptance hereof and all other
         notices in connection with the performance, default or enforcement of
         any payment hereunder except as required by the Transaction Documents;
         (iv) waive all rights of abatement, diminution, postponement or
         deduction, or to any defense other than payment, or to any right of
         setoff or recoupment arising out of any breach under any of the
         Transaction Documents, by any party thereto or any beneficiary thereof,
         or out of any obligation at any time owing to the Servicer or the
         Company; (v) agree that any consent, waiver or forbearance hereunder
         with respect to an event shall operate only for such event and not for
         any subsequent event; (vi) consent to any and all extensions of time
         that may be granted by Financial Security with respect to any payment
         hereunder or other provisions hereof and to the release of any security
         at any time given for any payment hereunder, or any part thereof, with
         or without substitution, and to the release of any Person or entity
         liable for any such payment; and (vii) consent to the addition of any
         and all other makers, endorsers, guarantors and other obligors for any
         payment hereunder, and to the acceptance of any and all other security
         for any payment hereunder, and agree that the addition of any such
         obligors or security shall not affect the liability of the parties
         hereto for any payment hereunder.

                  (c) Nothing herein shall be construed as prohibiting the
         Servicer or the Company from pursuing any rights or remedies it may
         have against any Person other than Financial Security in a separate
         legal proceeding.

                  SECTION 4.04 Assignments; Reinsurance; Third-Party Rights.

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

                                       26
<PAGE>

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

                  (c) In addition, Financial Security shall be entitled to
         assign or pledge to any bank or other lender providing liquidity or
         credit with respect to the Transaction or the obligations of Financial
         Security in connection therewith any rights of Financial Security under
         the Transaction Documents, or with respect to any real or personal
         property or other interests pledged to Financial Security, or in which
         Financial Security has a security interest, in connection with the
         Transaction.

                  (d) Except as provided herein with respect to participants and
         reinsurers, nothing in this Insurance Agreement shall confer any right,
         remedy or claim, express or implied, upon any Person, other than
         Financial Security, against the Servicer or the Company, and all the
         terms, covenants, conditions, promises and agreements contained herein
         shall be for the sole and exclusive benefit of the parties hereto and
         their successors and permitted assigns. The Trustee shall not have any
         right to payment from any premiums paid or payable hereunder or from
         any other amounts paid by the Servicer or the Company pursuant to
         Section 3.02, 3.03 or 3.04 hereof.

                  SECTION 4.05 Liability of Financial Security. Neither
Financial Security nor any of its officers, directors or employees shall be
liable or responsible for: (a) the use which may be made of the Note Policy by
the Trustee or for any acts or omissions of the Trustee in connection therewith
or (b) the validity, sufficiency, accuracy or genuineness of documents delivered
to Financial Security (or its Fiscal Agent) in connection with any claim under
the Note Policy, or of any signatures thereon, even if such documents or
signatures should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged (unless Financial Security had actual
knowledge thereof). In furtherance and not in limitation of the foregoing,
Financial Security (or its Fiscal Agent) may accept documents that appear on
their face to be in order, without responsibility for further investigation.

                                   ARTICLE V.

                           EVENTS OF DEFAULT; REMEDIES

                  SECTION 5.01 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 Note
         Policy;

                                       27
<PAGE>

                  (b) any representation or warranty made by the Servicer or the
         Company under any of the Transaction Documents, or in any certificate
         or report furnished under any of the Transaction Documents, shall prove
         to be untrue or incorrect in any material respect; provided, however,
         that if the Servicer or the Company, as applicable, effectively cures
         any such defect in any such representation or warranty or any such
         certificate or report within the applicable cure period, if any,
         expressly provided in the applicable Transaction Document, such defect
         shall not constitute an Event of Default hereunder;

                  (c) (i) the Servicer or the Company shall fail to pay when due
         any amount payable by the Servicer or the Company under any of the
         Transaction Documents, unless such amounts are paid in full within any
         applicable cure period, if any, expressly provided for under the
         applicable Transaction Document; (ii) the Servicer or the Company shall
         have asserted that any of the Transaction Documents to which it is a
         party is not valid and binding on the parties thereto; or (iii) any
         court, governmental authority or agency having jurisdiction over any of
         the parties to any of the Transaction Documents or any property thereof
         shall find or rule that any material provision of any of the
         Transaction Documents is not valid and binding on the parties thereto;

                  (d) the Servicer or the Company shall fail to perform or
         observe any other covenant or agreement contained in any of the
         Transaction Documents (except for the obligations described under
         clause (c) above) and such failure shall continue for a period of 30
         days after written notice given to any of the Servicer or the Company;

                  (e) the Servicer or the Company 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 the Servicer or the Company under the United
         States Bankruptcy Code or similar law, domestic or foreign, or any
         proceeding shall be instituted against the Servicer or the Company
         seeking liquidation of its assets and such Person shall fail to take
         appropriate action resulting in the withdrawal or dismissal of such
         proceeding within 60 days or there shall be appointed or the Servicer
         or the Company 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
         properties or assets or such Person shall take any corporate action in
         furtherance of any of the foregoing;

                  (f) on any Payment Date, the sum of Available Funds with
         respect to such Payment Date and the amounts available in the Series
         2003-A Spread Account (prior to withdrawals therefrom in accordance
         with the terms of the

                                       28
<PAGE>

         Spread Account Agreement and prior to any deposits into such Spread
         Account from Spread Accounts, if any, related to any other Series (as
         defined in the Spread Account Agreement)) is less than the sum of
         amounts payable on such Payment Date pursuant to clauses (i) through
         (iii) of Section 12.02(d) of the Indenture; and such deficiency remains
         outstanding for (i) 30 days after such Payment Date or (ii) 10 days
         after the Servicer and the Company (unless such notice cannot be
         delivered to the Company due to restrictions imposed in a bankruptcy
         proceeding) have received notice from Financial Security, whichever
         occurs first.

                  (g) the occurrence of a Servicer Event of Default under the
         Servicing Agreement or similar agreement among (x) Financial Security
         and (y) Servicer and/or the Company and/or any other Affiliate of
         Servicer entered into with respect to another Series;

                  (h) the occurrence of an "Event of Default" under and as
         defined in any Insurance and Indemnity Agreement or similar agreement
         among (x) Financial Security and (y) Servicer and/or the Company and/or
         any other Affiliate of Servicer entered into with respect to another
         Series;

                  (i) a notice of termination with respect to the Lockbox
         Agreement shall have been delivered and a replacement Lockbox Bank
         acceptable to Financial Security shall not have executed a Lockbox
         Agreement in form and substance satisfactory to Financial Security
         within 30 days of such notice;

                  (j) the Company becomes taxable as an association (or publicly
         traded partnership) taxable as a corporation for federal or state
         income tax purposes;

                  (k) the Securities not being treated as debt for federal or
         applicable state income tax purposes and such characterization has a
         material adverse effect on the Company, the holders of the Securities
         or Financial Security;

                  (l) A default shall have occurred and be continuing under any
         instrument or agreement evidencing, securing or providing for the
         issuance of Indebtedness for borrowed money in excess of $500,000 of,
         or guaranteed by, the Company, the Servicer, Financial Pacific Company
         or any of the respective Subsidiaries of such entities, which default
         (i) is a default in payment of any principal or interest on such
         indebtedness when due or, if later, within any applicable grace period,
         or (ii) shall have resulted in acceleration of the maturity of such
         indebtedness;

                  (m) (i) Any litigation (including, without limitation,
         derivative actions), arbitration proceedings or governmental
         proceedings not disclosed in writing by the Company, the Servicer,
         Financial Pacific Company or any of the respective Subsidiaries of such
         entities to Financial Security prior to the date of execution and
         delivery of this Agreement is pending against the Company, the
         Servicer, Financial Pacific Company or any of the respective
         subsidiaries of any of such entities, which, in the opinion of
         Financial Security, if adversely determined,

                                       29
<PAGE>

         could result in a Material Adverse Change, or (ii) any material
         development not so disclosed has occurred in any litigation (including,
         without limitation, derivative actions), arbitration proceedings or
         governmental proceedings so disclosed, which, in the opinion of
         Financial Security, would have a reasonable probability of resulting in
         a Material Adverse Change;

                  (n) a Change in Control shall occur;

                  (o) The IRS shall file notice of a lien pursuant to Section
         6323 of the Code with regard to any of the assets of the Company, the
         Servicer, Financial Pacific Company or any of the respective
         Subsidiaries of such entities, or the PBGC shall file notice of a lien
         pursuant to Section 4068 of ERISA with regard to any of the assets of
         the Company, the Servicer, Financial Pacific Company or any of the
         respective Subsidiaries of such entities, and such lien shall not have
         been released within five (5) Business Days, unless such lien is being
         contested by the Company, the Servicer, Financial Pacific Company or
         any of the respective Subsidiaries of such entities in good faith
         pursuant to appropriate proceedings;

                  (p) a breach of any financial covenant set forth in Section
         2.02(q) hereof;

                  (q) the failure of Financial Pacific Company and its
         consolidated Subsidiaries (including the Servicer and the Company) to
         maintain a ratio, on a consolidated basis, of total debt (which shall
         only include interest-bearing debt) to Tangible Net Worth not to exceed
         24 to 1, calculated on a quarterly basis beginning with the quarter
         ended September 30, 2003;

                  (r) Financial Pacific Company shall fail to obtain the prior
         written consent of Financial Security, for (a) any amendment,
         restatements, modifications or prepayments to any of its subordinated
         debt agreements, (b) incurring indebtedness for borrowed money, other
         than that provided for in its currently outstanding subordinated note
         agreement, (c) purchasing or establishing any subsidiary directly or
         indirectly owned by Financial Pacific Company, other than the Servicer,
         Financial Pacific Funding III, LLC and the Company, or (d) making any
         material change in the character of its business;

                  (s) any judgments against, or settlements by, the Servicer or
         the Company for damages in excess of $500,000 are rendered or made,
         unless such amount is covered by valid insurance with respect to which
         the insurer has admitted liability or, in the case of a judgment, such
         judgment shall not have been discharged or stayed within sixty days of
         its entry;

                  (t) the Company or the Servicer assigns, or attempts to
         assign, any of its rights as obligations under any instrument or
         agreement evidencing, securing or providing for the issuance of
         indebtedness for borrowed money;

                                       30
<PAGE>

                  (u) the occurrence of a material exception in any audit of the
         Company, the Servicer, Financial Pacific Company or any of the
         respective Subsidiaries which may have a material adverse effect on
         Financial Security, in the opinion of Financial Security;

                  (v) the Company is required to register as an "investment
         company" under the Investment Company Act of 1940, as amended;

                  (w) a Material Adverse Change has occurred with respect to the
         Servicer or the Company;

                  (x) the three month rolling simple average 31 to 60 Day
         Delinquency Ratio exceeds the percentage specified for such period in
         the "Delinquency Matrix-Level 2 Trigger" included in Schedule 5.01
         hereto;

                  (y) the three month rolling simple average 61 to 90 Day
         Delinquency Ratio exceeds the percentage specified for such period in
         the "Delinquency Matrix-Level 2 Trigger" included in Schedule 5.01
         hereto;

                  (z) the three month rolling simple average NPA Ratio exceeds
         the percentage specified for such period in the "Delinquency
         Matrix-Level 2 Trigger" included in Schedule 5.01 hereto;

                  (aa) the Cumulative Net Default Rate as of any Calculation
         Date is equal to or greater than the percentage specified for such
         period in the "Default Matrix-Level 2 Trigger" included in Schedule
         5.01 hereto; or

                  (bb) the Cumulative Gross Default Rate as of any Calculation
         Date is equal to or greater than the percentage specified for such
         period in the "Default Matrix-Level 2 Trigger" included in Schedule
         5.01 hereto.

                  SECTION 5.02 Remedies; Waivers.

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

                           (i) exercise any rights and remedies available under
                  the Transaction Documents in its own capacity or in its
                  capacity as the Person entitled to exercise the rights of the
                  Controlling Party under the Transaction Documents subject to
                  the terms thereof, including, without limitation, its right to
                  accelerate the Securities or to terminate Servicer as Servicer
                  and to appoint a substitute servicer subject to the terms
                  thereof; or

                           (ii) take whatever action at law or in equity may
                  appear necessary or desirable in its judgment to enforce
                  performance of any obligation of the Servicer or the Company
                  under the Transaction Documents.

                                       31
<PAGE>

                  (b) Unless otherwise expressly provided, no remedy herein
         conferred upon or reserved is intended to be exclusive of any other
         available remedy, but each remedy shall be cumulative and shall be in
         addition to other remedies given under the Transaction Documents or
         existing at law or in equity. No delay or 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 Financial Security to exercise any
         remedy reserved to Financial Security 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 any reason, or has been determined
         adversely to Financial Security, 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 Financial Security shall
         continue as though no such proceeding had been instituted.

                  (d) Financial Security shall have the right, to be exercised
         in its complete discretion, to waive any covenant, Default or Event of
         Default by a writing setting forth the terms, conditions and extent of
         such waiver signed by Financial Security and delivered to Servicer and
         the Company and a copy to each of the Rating Agencies. Any such waiver
         may only be effected in writing duly executed by Financial Security,
         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 VI.

                                  MISCELLANEOUS

                  SECTION 6.01 Amendments, Etc. This Insurance Agreement may be
amended, modified or terminated only by written instrument or written
instruments signed by the parties hereto. No act or course of dealing shall be
deemed to constitute an amendment, modification or termination hereof.

                  SECTION 6.02 Notices. All demands, notices and other
communications to be given hereunder shall be in writing (except as otherwise
specifically provided herein) and shall be mailed by registered mail or
personally delivered or telecopied to the recipient as follows:

                  (a) To Financial Security: Financial Security Assurance Inc.

                                       32
<PAGE>

                                            350 Park Avenue
                                            New York, NY 10022
                                            Attention:  Senior Vice President,
                                            Transaction Oversight Department

                                            (with a copy to the General Counsel)

                                       Re:  Financial Pacific Funding II, LLC
                                            Policy No. 51429-N

                                            Confirmation:   (212) 826-0100
                                            Telecopy Nos.:  (212) 339-3518,
                                                            (212) 339-3529

         (in each case in which notice or other communication to Financial
         Security refers to an Event of Default, a claim on the Note Policy or
         with respect to which failure on the part of Financial Security to
         respond shall be deemed to constitute consent or acceptance, then a
         copy of such notice or other communication should also be sent to the
         attention of each of the General Counsel and the Head-Financial
         Guaranty Group and shall be marked to indicate "URGENT MATERIAL
         ENCLOSED.")

                  (b) To the Servicer:      Financial Pacific Leasing, LLC
                                            3455 S. 344 Way Suite 300
                                            Federal Way, WA 98001
                                            Attention: Erik F. Weedon
                                            Telecopy No.: (253) 568-2222
                                            Confirmation: (253) 568-6140

                  (c) To the Company:  Financial Pacific Funding II, LLC
                                       3455 S. 344 Way Suite 300

                                       Federal Way, WA 98001
                                       Attention: Erik F. Weedon
                                       Telecopier No.: (253) 568-2222
                                       Confirmation: (253) 568-6140

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

                  SECTION 6.03 Payment Procedure. In the event of any payment by
Financial Security for which it is entitled to be reimbursed or indemnified as
provided above, each of the Servicer and the Company, as the case may be, agrees
to accept the voucher or other evidence of payment as prima facie evidence of
the propriety thereof and the liability therefor to Financial Security. All
payments to be made to Financial

                                       33
<PAGE>

Security under this Insurance Agreement shall be made to Financial Security in
lawful currency of the United States of America in immediately available funds
to the account number provided in the Premium Letter before 1:00 p.m. (New York,
New York time) on the date when due or as Financial Security shall otherwise
direct by written notice to the Servicer and the Company. In the event that the
date of any payment to Financial Security or the expiration of any time period
hereunder occurs on a day which is not a Business Day, then such payment or
expiration of time period shall be made or occur on the next succeeding Business
Day with the same force and effect as if such payment was made or time period
expired on the scheduled date of payment or expiration date. Payments to be made
to Financial Security under this Insurance Agreement shall bear interest at the
Late Payment Rate from the date due to the date paid.

                  SECTION 6.04 Severability. In the event that any provision of
this Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.

                  SECTION 6.05 Governing Law. THIS INSURANCE AGREEMENT AND ALL
MATTERS ARISING OUT OF OR RELATING TO THIS INSURANCE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                  SECTION 6.06 Consent to Jurisdiction.

                  (a) THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE
         JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
         DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK LOCATED IN
         THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT OF ANY SUCH
         COURT, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR
         IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS
         CONTEMPLATED THEREUNDER OR FOR RECOGNITION OR ENFORCEMENT OF ANY
         JUDGMENT, AND THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
         AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY
         BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT
         PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE THAT
         A FINAL JUDGMENT IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE
         CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
         JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. TO THE EXTENT
         PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND AGREE
         NOT TO ASSERT BY

                                       34
<PAGE>

         WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR
         PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
         JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS
         BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
         PROCEEDING IS IMPROPER OR THAT THE TRANSACTION DOCUMENTS OR THE SUBJECT
         MATTER THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS.

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

                  (c) Each of the Servicer and the Company hereby agree that at
         all times during the Term of the Insurance Agreement, each of the
         Servicer and the Company shall have appointed, with prior written
         notice to Financial Security, an agent registered with the Secretary of
         State of the State of New York, with an office in the County of New
         York in the State of New York, as its true and lawful attorney and duly
         authorized agent for acceptance of service of legal process (which as
         of the date hereof is CT Corporation System, whose address is 1633
         Broadway, New York, New York 10019). Each of the Servicer and the
         Company agrees that service of such process upon such Person shall
         constitute personal service of such process upon it.

                  (d) Nothing contained in this Insurance Agreement shall limit
         or affect Financial Security's right to serve process in any other
         manner permitted by law or to start legal proceedings relating to any
         of the Transaction Documents against the Servicer or the Company or its
         respective property in the courts of any jurisdiction.

                  SECTION 6.07 Consent of Financial Security. In the event that
Financial Security's consent is required under any of the Transaction Documents,
the determination whether to grant or withhold such consent shall be made by
Financial Security in its sole discretion without any implied duty towards any
other Person, except as otherwise expressly provided therein.

                  SECTION 6.08 Counterparts. This Insurance Agreement may be
executed in counterparts by the parties hereto, and all such counterparts shall
constitute one and the same instrument.

                  SECTION 6.09 Trial by Jury Waived. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN
CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR ANY OF THE TRANSACTIONS

                                       35
<PAGE>

CONTEMPLATED THEREUNDER. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT IT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THE
TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THIS
WAIVER.

                  SECTION 6.10 Limited Liability. No recourse under any
Transaction Document shall be had against, and no personal liability shall
attach to, any officer, employee, director, Affiliate or shareholder of any
party hereto, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise in respect of any of
the Transaction Documents, the Securities or the Note Policy, it being expressly
agreed and understood that each Transaction Document is solely a corporate
obligation of each party hereto, and that any and all personal liability, either
at common law or in equity, or by statute or constitution, of every such
officer, employee, director, Affiliate or shareholder for breaches by any party
hereto of any obligations under any Transaction Document is hereby expressly
waived as a condition of and in consideration for the execution and delivery of
this Insurance Agreement.

                  SECTION 6.11 Entire Agreement. This Insurance Agreement, the
Premium Letter and the Note Policy set forth the entire agreement between the
parties with respect to the subject matter thereof, and this Insurance Agreement
supersedes and replaces any agreement or understanding that may have existed
between the parties prior to the date hereof in respect of such subject matter.

                                       36
<PAGE>

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

                                    FINANCIAL SECURITY ASSURANCE INC.

                                    By: /s/ Mark Castiglione
                                        ---------------------------
                                        Name: Mark Castiglione
                                        Title: Managing Director

                                    FINANCIAL PACIFIC LEASING, LLC

                                    By: /s/ Peter A. Davis
                                        ---------------------------
                                        Name: Peter A. Davis
                                        Title: Chief Financial Officer

                                    FINANCIAL PACIFIC FUNDING II, LLC

                                    By: /s/ Peter A. Davis
                                        ---------------------------
                                        Name: Peter A. Davis
                                        Title: Chief Financial Officer

                                       37
<PAGE>

                                   APPENDIX I

                                   DEFINITIONS

                  "Accumulated Funding Deficiency" shall have the meaning
provided in Section 412 of the Code and Section 302 of ERISA, whether or not
waived.

                  "Acquisition Agreement" means the Amended and Restated
Acquisition Agreement, dated as of July 14, 2003, by and between the Company and
Servicer, as such agreement may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof.

                  "Agents" means WestLB AG, London Branch, in its capacity as
"Manager" and as "Initial Purchaser" and WestLB Panmure Securities Inc., in its
capacity as "remarketing agent" for the Initial Purchaser.

                  "Agent Information" has the meaning provided in the
Indemnification Agreement.

                  "Business Day" means any day other than a Saturday, a Sunday
or a day on which commercial banking institutions or trust companies in the City
of New York, the State of Washington, or the city in which the Corporate Trust
Office of the Trustee is relocated or any location of any successor Servicer,
successor Trustee or successor Collateral Agent shall be authorized or obligated
by law, executive order, or governmental decree to be closed.

                  "Change of Control" means any of the following:

                  (a) the Servicer fails to own 100% of the membership interests
         in the Company;

                  (b) (i) Financial Pacific Company fails to own 100% of the
         membership interests in the Servicer; or

                           (ii) Dale A. Winter shall die, become incompetent,
                  become unable to work for a period of three or more
                  consecutive months, be terminated or cease to be included in
                  the management of the Servicer for any other reason, and a
                  replacement consented to by Financial Security (which consent
                  shall not be unreasonably withheld or delayed) has not been
                  appointed within 30 days of such event; or

                  (c) Windward Capital Associates, L.P., or limited partnerships
         of which it is the general partner, fail to own at least 51% of the
         issued and outstanding shares of the capital stock of Financial Pacific
         Company having the ordinary voting power to elect a majority of the
         directors of Financial Pacific Company.

<PAGE>

                  "Code" means the Internal Revenue Code of 1986, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.

                  "Commission" means the Securities and Exchange Commission.

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

                  "Company" means Financial Pacific Funding II, LLC, a Delaware
limited liability company.

                  "Controlling Party" means Financial Security, so long as no
Insurer Default has occurred and is continuing.

                  "Date of Issuance" means the date on which the Note Policy is
issued as specified therein.

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

                  "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" means any event of default specified in
Section 5.01 of the Insurance Agreement.

                  "Expiration Date" means the final date of the Term Of This
Policy, as specified in the Note Policy.

                  "Financial Security" means Financial Security Assurance Inc.,
a New York stock insurance company, its successors and assigns.

                  "Financial Security Information" in respect of the Offering
Document means the information contained in the section "THE NOTE INSURER" and
the financial statements of Financial Security attached to the Offering Document
or incorporated by reference therein.

                  "Financial Statements" means, with respect to Financial
Pacific Company, the balance sheets and consolidated balance sheets of its
Subsidiaries as of December 31, 2002, and December 31, 2001, and the statements
of income, retained earnings and cash flows for the 12-month period then ended
and the notes thereto and the balance sheets as of March 31, 2003 and the
statements of income, retained earnings and cash flows for the six months then
ended and the notes thereto.

                                       39
<PAGE>

                  "Fiscal Agent" means the fiscal agent, if any, designated
pursuant to the terms of the Note Policy.

                  "Guarantee" means, as to any Person (the "Guaranteeing
person"), any obligation of the Guaranteeing person guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the Guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Guarantee shall not include the endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any guarantee of
any Guaranteeing person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect of
which such Guarantee is made and (b) the maximum amount for which such
Guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee, unless such primary obligation and the maximum amount
for which such Guaranteeing person may be liable are not stated or determinable,
in which case the amount of such Guarantee shall be such Guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Guaranteeing person in good faith.

                  "Indebtedness" means with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all indebtedness of others secured by (or for which the holder
of such indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed (only to the extent of the
fair market value of such asset if such indebtedness has not been assumed by
such Person), (d) all Guarantees of such Person, (e) all capitalized lease
obligations of such Person, and (f) all obligations of such Person as an account
party in respect of letters of credit and similar instruments issued for the
account of such Person.

                                       40
<PAGE>

                  "Indemnification Agreement" means the Indemnification
Agreement, dated as of July 9, 2003, among Financial Security, the Company and
the Agents, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.

                  "Indenture" means the Indenture, dated as of July 14, 2003
between the Company and Wells Fargo, as Trustee and Back-up Servicer, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.

                  "Insurer Default" shall mean any one of the following events
shall have occurred and be continuing:

                          (i)  Financial Security fails to make a payment
                  required under the Policy;

                          (ii) Financial Security (A) files any petition or
                  commences any case or proceeding under any
                  provision or chapter of the United States Bankruptcy Code or
                  any other similar Federal or State law relating to insolvency,
                  bankruptcy, rehabilitation, liquidation or reorganization, (B)
                  makes a general assignment for the benefit of its creditors or
                  (C) has an order for relief entered against it under the
                  United States Bankruptcy Code or any other similar Federal or
                  State law relating to insolvency, bankruptcy, rehabilitation,
                  liquidation or reorganization which is final and
                  nonappealable; or

                           (iii) a court of competent jurisdiction, the New York
                  Department of Insurance or other competent regulatory
                  authority enters a final and nonappealable order, judgment or
                  decree (A) appointing a custodian, trustee, agent or receiver
                  for Financial Security or for all or any material portion of
                  its property or (B) authorizing the taking of possession by a
                  custodian, trustee, agent or receiver of Financial Security
                  (or the taking of possession of all or any material portion of
                  the property of Financial Security).

                  "Insurance Agreement" means this Insurance and Indemnity
Agreement, dated as of July 14, 2003, among Financial Security, the Servicer and
the Company, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof.

                  "Insurance Agreement Indenture Cross Default" means any event
of default specified in Section 5.01 of the Insurance Agreement.

                  "Insurance Policies" means collectively, the SAFECO insurance
policy and the umbrella insurance policy issued by American States Insurance
Company maintained by the Servicer.

                                       41
<PAGE>

                  "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.

                  "Late Payment Rate" means the lesser of (a) the greater of (i)
the per annum rate of interest, publicly announced from time to time by JPMorgan
Chase Bank at its principal office in the City of New York, as its prime or base
lending rate (any change in such rate of interest to be effective on the date
such change is announced by JPMorgan Chase Bank) plus 3%, and (ii) the then
applicable highest rate of interest on the Securities and (b) the maximum rate
permissible under applicable usury or similar laws limiting interest rates. The
Late Payment Rate shall be computed on the basis of the actual number of days
elapsed over 360 days.

                  "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; except that the
interest of an Existing Broker as the named lessor in a Contract or the related
Equipment under a Discount Contract shall not be deemed to be a Lien.

                  "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
Affiliates, or (ii) the ability of such Person to perform its obligations under
any of the Transaction Documents to which it is a party or (b) in respect of the
Receivables, a material adverse change in (i) the value or marketability of the
Receivables or (ii) the probability that amounts now or hereafter due in respect
of such Receivables will be collected on a timely basis.

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

                  "Multiemployer Plan" means a multiemployer plan (within the
meaning of Section 4001(a)(3) of ERISA) in respect of which a Commonly
Controlled Entity makes contributions or has liability.

                                       42
<PAGE>

                  "Note Policy" means the financial guaranty insurance policy,
including any endorsements thereto, issued by Financial Security with respect to
the Securities, substantially in the form attached as Annex I to the Insurance
Agreement.

                  "Note Purchase Agreement" means the Note Purchase Agreement
dated as of July 9, 2003 among the Company, the Servicer and the Agents with
respect to the offer and sale of the Securities, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.

                  "Notice of Claim" means a Notice of Claim and Certificate in
the form attached as Exhibit A to Endorsement No. 1 to the Note Policy.

                  "Offering Document" means the Offering Memorandum dated July
9, 2003 in respect of the Securities and any amendment or supplement thereto and
any other offering document of the Company or any Affiliate thereof in respect
of the Securities that makes reference to the Note Policy.

                  "Other Conveyed Property" means the Collateral exclusive of
the Note Policy.

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

                  "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.

                  "Pledge Agreement" means the Pledge and Collateral Agency,
dated as of July 14, 2003 among Financial Security, the Servicer and the
Collateral Agent, as the same may be amended or supplemented or otherwise
modified from time to time in accordance with the terms thereof.

                  "Premium" means the premium payable in accordance with Section
3.02 of the Insurance Agreement and the Premium Supplement, if any.

                  "Premium Letter" means the side letter among Financial
Security, the Servicer and the Trustee, dated July 14, 2003, in respect of the
premium payable in consideration of the issuance of the Note Policy, as such
side letter may be amended or otherwise modified or otherwise substituted or
replaced by the signatories thereto.

                  "Premium Rate" means 0.90%.

                                       43
<PAGE>

                  "Premium Supplement" means a non-refundable premium, in
addition to the premium payable in accordance with Section 3.02 of the Insurance
Agreement, accruing to Financial Security in monthly installments commencing on
the Premium Supplement Commencement Date and on each monthly anniversary thereof
in accordance with the terms set forth in the Premium Letter.

                  "Premium Supplement Commencement Date" means the date of
occurrence of an Event of Default, whether or not Financial Security shall have
declared an "Event of Default" or shall have exercised, or be entitled to
exercise, any other rights or remedies under the Insurance Agreement.

                  "Provided Documents" means the Transaction Documents and any
documents, agreements, instruments, schedules (including, without limitation,
any Contract Schedule), certificates, statements, cash flow schedules, number
runs or other writings or data furnished to Financial Security by or on behalf
of the Servicer or the Company, in each case solely with respect to itself, its
Subsidiaries or Affiliates or the Transaction.

                  "Purchased Assets" has the meaning provided in the Acquisition
Agreement.

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

                  "Responsible Officer" means the Chairman of the Board, the
President, any Executive Vice President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary, the Chief Financial Officer or the Secretary
of the Servicer or the Company, as applicable.

                  "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 nonconsensual 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.

                  "Securities" means the $70,000,000 2.29% Receivables Backed
Notes, Series 2003-A issued pursuant to the Indenture.

                  "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.

                                       44
<PAGE>

                  "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.

                  "Securitization Agreement" has the meaning provided in
Paragraph C of the Introductory Statements to the Insurance Agreement.

                  "Series" means Series 2003-A or any, or as the context may
require, all, other series of certificates, securities, notes or other
obligations issued or arising as described in paragraph C of the Introductory
Statements to the Insurance Agreement.

                  "Series 2003-A" means the Securities issued on the date hereof
pursuant to the Indenture.

                  "Servicer" means Financial Pacific Leasing, LLC, a Washington
limited liability company.

                  "Servicer Information" means any information contained in or
incorporated by reference in any Offering Document other than the Agent
Information and the Financial Security Information.

                  "Servicer Termination Side Letter" means the letter from
Financial Security to the Servicer and the Trustee, dated as of July 14, 2003,
with regard to the renewal term of the Servicer, as such letter may be amended
or otherwise modified or substituted or replaced by the signatories thereto.

                  "Servicing Agreement" means the Servicing Agreement, dated as
of July 14, 2003 among the Company, the Servicer, the Back-up Servicer and
Trustee, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.

                  "S&P" means Standard & Poor's Ratings Group, a division of The
McGraw Hill Companies, Inc., and any successor thereto, and, if such entity
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 Financial Security.

                  "Special Event" means the occurrence of any one of the
following: (a) an Event of Default under the Insurance Agreement has occurred
and is continuing, (b) a Trigger Event has occurred and is continuing, (c) any
legal proceeding or binding arbitration is instituted with respect to the
Transaction or (d) any governmental or administrative investigation, action or
proceeding is instituted that would, if adversely decided, result in a Material
Adverse Change in respect of the Servicer, the Company or the Receivables.

                                       45
<PAGE>

                  "Spread Account Agreement" means the Master Spread Account
Agreement, dated as of July 14, 2003, among the Company, the Trustee named
therein, the Collateral Agent named therein and Financial Security, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.

                  "Subsidiary" means, with respect to any Person (herein
referred to as the "parent"), any corporation, partnership, association or other
business entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or more than 50% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by the parent or (b) that
is, at the time any determination is being made, otherwise controlled, by the
parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.

                  "Term of the Insurance Agreement" shall be determined as
provided in Section 4.01 of the Insurance Agreement.

                  "Term Of This Policy" has the meaning provided in the Note
Policy.

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

                  "Transaction Documents" means the Notes, the Insurance
Agreement, the Indemnification Agreement, the Acquisition Agreement, the
Servicing Agreement, the Indenture, the Premium Letter, the Lockbox Agreement,
the Note Purchase Agreement, the Servicer Termination Side Letter, the Spread
Account Agreement, the Pledge and Collateral Agency Agreement, each Westside
Release Letter and any other financing document related to Series 2003-A.

                  "Trigger Event" has the meaning provided in the Spread Account
Agreement.

                  "Trust Accounts" means the Distribution Account, the
Collection Account, the Lockbox Account and the Policy Payments Account.

                  "Trustee" means Wells Fargo Bank Minnesota, National
Association, not in its individual capacity but solely as trustee under the
Indenture, and any successor thereto as trustee, under the Indenture.

                  "Trust Indenture Act" means the Trust Indenture Act of 1939,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.

                  "Underfunded Plan" means any Plan that has an Underfunding.

                                       46
<PAGE>

                  "Underfunding" means, with respect to any Plan, the excess, if
any, of (a) the present value of all benefits under the Plan (based on the
assumptions used to fund the Plan pursuant to Section 412 of the Code) as of the
most recent valuation date over (b) the fair market value of the assets of such
Plan as of such valuation date.

                  "Westside" means Westside Funding Corporation., a Delaware
corporation.

                  "Westside Release Letter" means the Release Letter, dated as
of July 14, 2003, by Westside for the benefit of Servicer, pursuant to which
Westside releases its Lien and security interest and/or ownership interest in
the Receivables identified therein and certain other property related thereto.

                                       47
<PAGE>

                                   APPENDIX II

                      TO INSURANCE AND INDEMNITY AGREEMENT
                 CONDITIONS PRECEDENT TO ISSUANCE OF THE POLICY

                  (a) Payment of Initial Premium and Expenses; Premium Letter.
Financial Security shall have been paid, by or on behalf of Servicer, a
nonrefundable Premium and shall have been reimbursed, by or on behalf of
Servicer, for other fees and expenses identified in Section 3.02 of the
Insurance Agreement as payable at closing and Financial Security shall have
received a fully executed copy of the Premium Letter.

                  (b) Transaction Documents. Financial Security shall have
received a copy of each of the Transaction Documents in form and substance
satisfactory to Financial Security, duly authorized, executed and delivered by
each party thereto. Without limiting the foregoing, the provisions of the
Servicing Agreement relating to the payment to Financial Security of the Premium
due on the Note Policy and the reimbursement to Financial Security of amounts
paid under the Note Policy shall be in form and substance acceptable to
Financial Security in its sole discretion.

                  (c) Certified Documents and Resolutions. Financial Security
shall have received a copy of (i) the certificate of incorporation and bylaws
for each of the Servicer and the Company, and (ii) the resolutions of the board
of directors of each of the Servicer and the Company authorizing the issuance of
the Securities and the execution, delivery and performance by the Servicer and
the Company of the Transaction Documents and the transactions contemplated
thereby, certified by a Secretary or Assistant Secretary of the Servicer and the
Company respectively (which certificate shall state that such certificate of
formation and limited liability company agreement are in full force and effect
without modification on the Date of Issuance).

                  (d) Incumbency Certificate. Financial Security shall have
received a certificate of a Secretary or Assistant Secretary of the Trustee, the
Servicer, the Company and Westside respectively, certifying the name and
signatures of the officers of the Trustee, the Servicer, the Company and
Westside, as the case may be, authorized to execute and deliver the Transaction
Documents and that all consents necessary to execute and deliver such documents
have been obtained.

                  (e) Representations and Warranties; Certificate. The
representations and warranties of the Servicer and the Company, as the case may
be, in the Insurance Agreement shall be true and correct as of the Date of
Issuance with respect to such Person as if made on the Date of Issuance and
Financial Security shall have received a certificate of an appropriate officer
of the Servicer or the Company, as the case may be, to that effect.

                  (f) Opinions of Counsel. Financial Security shall have
received opinions of counsel addressed to Financial Security, Moody's and S&P in
respect of the

<PAGE>

Trustee, the Servicer and the Company, the other parties to the Transaction
Documents and the Transaction in form and substance satisfactory to Financial
Security, addressing such matters as Financial Security may reasonably request,
including without limitation, the items set forth in Appendix A hereto, and the
counsel providing each such opinion shall have been instructed by its client to
deliver such opinion to the addressees thereof.

                  (g) Approvals, Etc. Financial Security shall have received
true and correct copies of all approvals, licenses and consents, if any,
required in connection with the Transaction.

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

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

                  (j) Satisfaction of Conditions of Initial Purchaser. All
conditions in the Note Purchase Agreement shall have been satisfied.

                  (k) Issuance of Ratings. Financial Security shall have
received confirmation that the risk secured by the Note Policy constitutes an
investment grade risk by S&P and an insurable risk by Moody's and that the
Securities, when issued, will be rated "AAA" by S&P and "Aaa" by Moody's.

                  (l) Maintenance of Contract Files; Filings and Recordings.
Financial Security shall have received evidence satisfactory to it that: (i) the
Contract Files related to the Receivables are being maintained by and held in
the custody of the Trustee pursuant to the Indenture; (ii) all filings necessary
to perfect the interest of the Trustee in the Receivables and the Other Conveyed
Property and the Spread Account have been made except that the filings
evidencing the amendments to, and/or termination of, UCC financing statements
evidencing the release by Westside and all other relevant parties of any
interests in the Receivables and the Other Conveyed Property may be made no
later than the Closing Date, and (iii) all taxes, fees and other changes payable
in connection with such filings shall have been paid.

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

                  (n) Perfection Certificate. A duly authorized officer of the
Servicer shall have executed and delivered to Financial Security on or prior to
the Closing Date a certificate in the form attached as Exhibit B hereto, which
shall contain the representation

<PAGE>

of Servicer that each of the financing statements listed in the schedule
attached thereto have been, or in the case of any such financing statement on
Form UCC-3 or UCC-2, as of the Closing Date will be, filed in the applicable
filing office and jurisdiction, bearing (as applicable) the applicable filing
index number, specified in such schedule with respect to such financing
statement.

                  (o) Additional Items. Financial Security shall have received
such other documents instruments, approvals or opinions requested by Financial
Security as may be reasonably necessary to effect the Transaction, including but
not limited to evidence satisfactory to Financial Security that all conditions
precedent, if any, in the Transaction Documents have been satisfied.

                  (p) Release Documentation. (i) Financial Security shall have
received the Westside Release Letter and such other documents as are requested
by Financial Security in connection with (A) the release by Westside of its Lien
and security interest in certain of the Receivables and such other related
property pursuant to the Westside Release Letter and (B) the repayment by
Servicer of any indebtedness relating to the Receivables owed by Servicer to
Westside or otherwise in connection with the execution and delivery of the
Westside Release Letter or otherwise, in form and substance satisfactory to
Financial Security in its sole discretion and (ii) Financial Security shall have
received evidence of delivery to the Trustee for filing of amendments to, and/or
terminations of, UCC financing statements to be filed in such locations as are
required to evidence the release of any Liens of Westside and other relevant
parties, as the case may be, on the Receivables and the Other Conveyed Property
relating thereto no later than the Closing Date.<PAGE>

                                                                   Exhibit 10.29

                                                                  EXECUTION COPY

                                 AMENDMENT NO. 1

                            dated as of March 3, 2004

                                      among

                       FINANCIAL SECURITY ASSURANCE INC.,

                         FINANCIAL PACIFIC LEASING, LLC

                                       and

                        FINANCIAL PACIFIC FUNDING II, LLC

                                       to

                        INSURANCE AND INDEMNITY AGREEMENT

                            dated as of July 14, 2003

<PAGE>

              AMENDMENT NO. 1 TO INSURANCE AND INDEMNITY AGREEMENT

         AMENDMENT NO. 1, dated as of March 3, 2004 (the "Amendment") among
FINANCIAL SECURITY ASSURANCE INC., ("Financial Security"), FINANCIAL PACIFIC
LEASING, LLC (the "Servicer") and FINANCIAL PACIFIC FUNDING II, LLC (the
"Company"), to INSURANCE AND INDEMNITY AGREEMENT, dated as of July 14, 2003, (as
it may be amended, amended and restated, supplemented or otherwise modified from
time to time in accordance with its terms, the "Insurance Agreement").

                                    RECITALS

         WHEREAS, Financial Security, the Company and the Servicer
(collectively, the "Amending Parties") have entered into the Insurance Agreement
and the Amending Parties desire to amend the Insurance Agreement in certain
respects as provided below.

                                   AGREEMENTS

         In consideration of the premises, and for other good and valuable
consideration, the adequacy, receipt and sufficiency of which are hereby
acknowledged, the Amending Parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         SECTION 1.1. Defined Terms. Unless defined in this Amendment,
capitalized terms used in this Amendment (including in the Preamble and the
Recitals) shall have the meaning given such terms in the Insurance Agreement, as
identifiable from the context in which such term is used.

                                   ARTICLE II

                                    AMENDMENT

         SECTION 2.1. Amendments to Schedule 5.01. Schedule 5.01 of the
Insurance Agreement is hereby replaced in its entirety by Schedule 5.01 "DEFAULT
MATRIX - LEVEL 2 TRIGGERS" attached hereto.

                                   ARTICLE III

                           CONDITION TO EFFECTIVENESS

                                       2
<PAGE>

         SECTION 3.1. Execution of Amendment By Amending Parties. This Amendment
shall become effective upon receipt by Financial Security of counterparts hereof
executed and delivered by the Company and the Servicer.

                                   ARTICLE IV

                                  MISCELLANEOUS

         SECTION 4.1. Ratification. Except as expressly set forth herein, this
Amendment shall not by implication or otherwise limit, impair, constitute a
waiver of, or otherwise affect the rights and remedies of any of the Amending
Parties under the Insurance Agreement, nor alter, modify, amend or in any way
affect any of the terms, conditions, obligations, covenants or agreements
contained in the Insurance Agreement, all of which are hereby ratified and
affirmed in all respects by each of the Amending Parties and shall continue in
full force and effect. This Amendment shall apply and be effective only with
respect to the provisions of the Insurance Agreement specifically referred to
herein and any references in the Insurance Agreement to the provisions of the
Insurance Agreement specifically referred to herein shall be to such provisions
as amended by this Amendment.

         SECTION 4.2. Counterparts. This Amendment may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all of such counterparts shall together constitute but one and the same
instrument.

         SECTION 4.3. GOVERNING LAW. THIS AMENDMENT AND ALL MATTERS ARISING OUT
OF OR RELATING TO THIS INSURANCE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

         SECTION 4.4. Waiver of Notice. Each of the Amending Parties waives any
prior notice and any notice period that may be required by any other agreement
or document in connection with the execution of this Amendment.

         SECTION 4.5. Headings. The headings of Sections contained in this
Amendment are provided for convenience only. They form no part of this Amendment
or the Insurance Agreement and shall not affect the construction or
interpretation of this Amendment or Insurance Agreement or any provisions hereof
or thereof.

                  [Remainder of Page Intentionally Left Blank]

                                       3
<PAGE>

         IN WITNESS WHEREOF, the Amending Parties have caused this Amendment to
be duly executed by their respective duly authorized officers as of the day and
year first above written.

                                          FINANCIAL SECURITY ASSURANCE
                                            INC.

                                          By: /s/ Errol Uhr
                                              -------------------------------
                                              Name: Errol Uhr
                                              Title: Managing Director

                                          FINANCIAL PACIFIC LEASING, LLC

                                          By: /s/ Peter A. Davis
                                              -------------------------------
                                               Name: Peter A. Davis
                                               Title: Chief Financial Officer

                                          FINANCIAL PACIFIC FUNDING II, LLC

                                          By: /s/ Peter A. Davis
                                              -------------------------------
                                              Name: Peter A. Davis
                                              Title: Chief Financial Officer

                                       4

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