Document:

<PAGE>   1
                                                                   EXHIBIT 10.4b

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                          ALLIED CAPITAL CORPORATION

                                NOTE AGREEMENT

                         Dated as of October 15, 2000

      Re: $115,000,000 8.54% Senior Notes, Series A due October 15, 2005

                                     and

    $10,000,000 Floating Rate Senior Notes, Series B due October 15, 2005

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<PAGE>   2

                              TABLE OF CONTENTS

                        (Not a part of the Agreement)

<TABLE>
<CAPTION>
SECTION                                                HEADING                                                 PAGE
<S>                        <C>                                                                                  <C>
SECTION 1.                 DESCRIPTION OF NOTES AND COMMITMENT....................................................1

       Section 1.1.        Description of Notes...................................................................1
       Section 1.2.        Commitment, Closing Date...............................................................2

SECTION 2.                 PAYMENT OF NOTES.......................................................................3

       Section 2.1.        Required Payments......................................................................3
       Section 2.2.        Optional Prepayment with Premium.......................................................3
       Section 2.3.        Notice of Optional Prepayments.........................................................3
       Section 2.4.        Application of Prepayments.............................................................3
       Section 2.5.        Direct Payment.........................................................................4

SECTION 3.                 REPRESENTATIONS........................................................................4

       Section 3.1.        Representations of the Company.........................................................4
       Section 3.2.        Representations of the Purchasers......................................................4

SECTION 4.                 CLOSING CONDITIONS.....................................................................6

       Section 4.1.        Conditions.............................................................................6
       Section 4.2.        Waiver of Conditions...................................................................7

SECTION 5.                 COVENANTS..............................................................................7

       Section 5.1.        Corporate Existence, Etc...............................................................7
       Section 5.2.        Insurance..............................................................................7
       Section 5.3.        Taxes, Claims for Labor and Materials, Compliance with Laws............................7
       Section 5.4.        Maintenance, Etc.......................................................................8
       Section 5.5.        Nature of Business.....................................................................8
       Section 5.6.        Capital Maintenance....................................................................8
       Section 5.7.        Interest Charges Coverage Ratio........................................................8
       Section 5.8.        Limitations on Debt; Interest Rate Swaps...............................................8
       Section 5.9.        Limitation on Liens....................................................................9
       Section 5.10.       Restricted Payments...................................................................11
       Section 5.11.       Mergers, Consolidations and Sales of Assets...........................................12
       Section 5.12.       Repurchase of Notes...................................................................14
       Section 5.13.       Transactions with Affiliates..........................................................14
       Section 5.14.       Termination of Pension Plans..........................................................14
       Section 5.15.       Reports and Rights of Inspection......................................................14
</TABLE>

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<TABLE>
<S>                        <C>                                                                                  <C>
SECTION 6.                 EVENTS OF DEFAULT AND REMEDIES THEREFOR...............................................17

       Section 6.1.        Events of Default.....................................................................17
       Section 6.2.        Notice to Holders.....................................................................18
       Section 6.3.        Acceleration of Maturities............................................................18
       Section 6.4.        Rescission of Acceleration............................................................19

SECTION 7.                 AMENDMENTS, WAIVERS AND CONSENTS......................................................20

       Section 7.1.        Consent Required......................................................................20
       Section 7.2.        Solicitation of Holders...............................................................20
       Section 7.3.        Effect of Amendment or Waiver.........................................................20

SECTION 8.                 INTERPRETATION OF AGREEMENT; DEFINITIONS..............................................20

       Section 8.1.        Definitions...........................................................................20
       Section 8.2.        Accounting Principles.................................................................32
       Section 8.3.        Directly or Indirectly................................................................32

SECTION 9.                 MISCELLANEOUS.........................................................................32

       Section 9.1.        Registered Notes......................................................................32
       Section 9.2.        Exchange of Notes.....................................................................32
       Section 9.3.        Loss, Theft, Etc. of Notes............................................................33
       Section 9.4.        Expenses, Stamp Tax Indemnity.........................................................33
       Section 9.5.        Powers and Rights Not Waived; Remedies Cumulative.....................................33
       Section 9.6.        Notices...............................................................................33
       Section 9.7.        Successors and Assigns................................................................34
       Section 9.8.        Survival of Covenants and Representations.............................................34
       Section 9.9.        Severability..........................................................................34
       Section 9.10.       Governing Law.........................................................................34
       Section 9.11.       Captions..............................................................................34

Signature........................................................................................................35
</TABLE>

Attachments to Note Agreement:

Schedule I        -        Names and Addresses of Purchasers

Exhibit A-1       -        Form of Series A Note
Exhibit A-2       -        Form of Series B Note
Exhibit B         -        Representations and Warranties
Exhibit C         -        Form of Opinion of Special Counsel to the Purchaser
Exhibit D         -        Form of Opinion of Counsel to the Company

                                     -ii-

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                           ALLIED CAPITAL CORPORATION

                                 NOTE AGREEMENT

      Re: $115,000,000 8.54% Senior Notes, Series A due October 15, 2005

                                     and

         $10,000,000 Floating Rate Senior Notes, Series B due October 15, 2005

                                                                   Dated as of
                                                              October 15, 2000

To the Purchasers named
  on Schedule I to this Agreement

Ladies and Gentlemen:

         The undersigned, ALLIED CAPITAL CORPORATION (the "Company"), a
Maryland corporation, hereby agrees with the Purchasers named on Schedule I to
this Agreement (the "Purchasers") as follows:

SECTION 1.           DESCRIPTION OF NOTES AND COMMITMENT.

         Section 1.1.   Description of Notes. The Company will authorize the
issue and sale of (a) $115,000,000 8.54% Senior Notes, Series A due October
15, 2005 (the "Series A Notes") and (b) $10,000,000 Floating Rate Senior
Notes, Series B due October 15, 2005 (the "Series B Notes" and together with
the Series A Notes, the "Notes" such term to include any such notes issued in
substitution therefor pursuant to SECTION 9 of this Agreement). The Series A
Notes and the Series B Notes shall be substantially in the forms set out in
Exhibits A-1 and A-2, respectively, with such changes therefrom, if any, as
may be approved by the Purchasers and the Company. The Notes are not subject
to prepayment or redemption at the option of the Company prior to their
expressed maturity dates except on the terms and conditions and in the amounts
and with the premium, if any, set forth in SECTION 2 of this Agreement.

         Section 1.2.   Applicable Interest Rates. (a) The Series A Notes
shall bear interest (computed on the basis of a 360-day year of twelve 30-day
months) on the unpaid principal balance thereof from the date of issuance at
the rate of 8.54% per annum, payable semiannually on April 15 and October 15
in each year, commencing April 15, 2001, until such principal sum shall have
become due and payable (whether at maturity, upon notice of prepayment or
otherwise) and to pay on demand interest (so computed) on any overdue
principal and premium (as provided herein) and, to the extent permitted by
applicable law, on any overdue interest, from

<PAGE>   5

the due date thereof at a rate of 10.54% per annum (whether by acceleration or
otherwise) until paid.

         (b)  (i) The Series B Notes shall bear interest (computed for the
actual number of days elapsed on the basis of a year consisting of 360 days)
on the unpaid principal thereof from the date of issuance at a floating rate
equal to the Series B Rate from time to time, payable quarterly on the last
day of each Interest Period other than the initial Interest Period, until such
principal sum shall have become due and payable (whether at maturity, upon
notice of prepayment or otherwise) and to pay on demand interest (so computed)
on any overdue principal and premium (as provided herein) and, to the extent
permitted by applicable law, on any overdue interest, from the due date
thereof at a rate equal to the Series B Overdue Rate, until paid.

        (ii)  The Company shall give notice to each holder of the Series B
Notes within five (5) Business Days after the beginning of each Interest
Period confirming the Series B Rate and the Series B Overdue Rate. Such notice
shall contain a certificate signed by a Senior Financial Officer of the
Company attaching a copy of the source of the market data by reference to
which the applicable interest rate was determined. Any holder of a Series B
Note may within 15 days after receipt of the notice furnished by the Company
pursuant to this subsection (ii) object to the Company's determination of the
applicable interest rate by delivering a certificate to the Company stating
such objection and specifying the details of such holder's calculation of the
applicable interest rate. The Company shall provide a copy of such certificate
to each holder of a Series B Note. If any such certificate shall not have been
delivered by the Company, the holders of a majority of the unpaid principal
amount of the Series B Notes shall calculate the applicable interest rate and
such calculation shall be binding in the absence of manifest error.

         Section 1.3.   Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to each Purchaser,
and such Purchaser agrees to purchase from the Company, Notes in the principal
amount set forth opposite such Purchaser's name on Schedule I hereto at a
price equal to the principal amount thereof on October 24, 2000 (the "Closing
Date"); provided that the Closing Date may be postponed to such other date
(but not more than ten days after the originally scheduled Closing Date) as
shall mutually be agreed upon by the Company and the Purchasers scheduled to
purchase the Notes on the Closing Date. Delivery of the Notes will be made at
the offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois
60603. On the Closing Date, the Company will deliver to each Purchaser the
Notes to be purchased by such Purchaser in the form of a single Note (or such
greater number of Notes in denominations of at least $500,000 as such
Purchaser may request) dated the Closing Date and registered in such
Purchaser's name (or in the name of such Purchaser's nominee), against
delivery by such Purchaser to the Company or its order of immediately
available funds in the amount of the purchase price therefor by wire transfer
via Fedwire of immediately available funds for the account of the Company to
Account Number 3931033237 at Bank of America, Bethesda, Maryland, (ABA
#052-001-633).

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SECTION 2.           PAYMENT OF NOTES.

         Section 2.1.   Required Payments.  (a) The entire principal amount of
the Series A Notes shall become due and payable on October 15, 2005.

         (b)     The entire principal amount of the Series B Notes shall
become due and payable on October 15, 2005.

         Section 2.2.   Optional Prepayment with Premium. (a) In addition to
the payments required by SECTION 2.1, upon compliance with SECTION 2.3 the
Company shall have the privilege, at any time and from time to time, of
prepaying the outstanding Series A Notes, either in whole or in part (but if
in part then in a minimum principal amount of $1,000,000) by payment of the
principal amount of the Series A Notes, or portion thereof to be prepaid, and
accrued interest thereon to the date of such prepayment, together with a
premium equal to the Series A Make-Whole Amount, determined as of two Business
Days prior to the date of such prepayment pursuant to this SECTION 2.2.

         (b)     In addition to the payments required by SECTION 2.1, upon
compliance with SECTION 2.3 the Company shall have the privilege, on any
interest payment date after October 15, 2002, of prepaying the outstanding
Series B Notes, either in whole or in part (but if in part then in a minimum
principal amount of $1,000,000), by payment of the principal amount of the
Series B Notes, or portion thereof to be prepaid, and accrued interest thereon
to the date of such prepayment, together with a premium equal to the Series B
Premium Amount.

         Section 2.3.   Notice of Optional Prepayments. The Company will give
notice of any prepayment of the Notes pursuant to SECTION 2.2 to each Holder
thereof not less than 30 days nor more than 60 days before the date fixed for
such optional prepayment specifying (i) such date, (ii) the principal amount
and the Series of the Holder's Notes to be prepaid on such date, (iii) that a
premium may be payable, (iv) the date when such premium will be calculated,
(v) the estimated premium and (vi) the accrued interest applicable to the
prepayment. Notice of prepayment having been so given, the aggregate principal
amount of the Notes specified in such notice, together with accrued interest
thereon and the premium, if any, payable with respect thereto shall become due
and payable on the prepayment date specified in said notice. Not later than
two Business Days prior to the prepayment date specified in such notice, the
Company shall provide each Holder of a Note written notice of the premium, if
any, payable in connection with such prepayment and, whether or not any
premium is payable, a reasonably detailed computation of the Series A
Make-Whole Amount in the case of the prepayment of Series A Notes or the
Series B Premium Amount in the case of the prepayment of Series B Notes (which
calculation shall be reasonably satisfactory to each Holder of the Notes to be
prepaid).

         Section 2.4.   Application of Prepayments. All partial prepayments
pursuant to SECTION 2.2 shall be applied on all outstanding Notes of the
Series to be prepaid ratably in accordance with the unpaid principal amounts
thereof.

         Section 2.5.   Direct Payment. Notwithstanding anything to the
contrary contained in this Agreement or the Notes, in the case of any Note
owned by any Holder that is a Purchaser or any other Institutional Holder
which has given written notice to the Company requesting that the

                                     -3-

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provisions of this SECTION 2.5 shall apply, the Company will punctually pay
when due the principal thereof, interest thereon and premium, if any, due with
respect to said principal, without any presentment thereof, directly to such
Holder at its address set forth in Schedule I hereto or such other address as
such Holder may from time to time designate in writing to the Company or, if a
bank account with a United States bank is so designated for such Holder on
Schedule I hereto the Company will make such payments in immediately available
funds to such bank account, marked for attention as indicated, or in such
other manner or to such other account in any United States bank as such Holder
may from time to time direct in writing.

SECTION 3.           REPRESENTATIONS.

         Section 3.1.   Representations of the Company. The Company represents
and warrants that all representations and warranties set forth in Exhibit B
are true and correct as of the date hereof and are incorporated herein by
reference with the same force and effect as though herein set forth in full.

         Section 3.2.   Representations of the Purchasers. Each Purchaser
represents, and in entering into this Agreement the Company understands, that
such Purchaser is acquiring the Notes in a private placement for the purpose
of investment and not with a view to the distribution thereof, and that such
Purchaser has no present intention of selling, negotiating or otherwise
disposing of the Notes; it being understood, however, that the disposition of
such Purchaser's property shall at all times be and remain within its control.
Each Purchaser represents that it is an institutional "accredited investor"
within the meaning of Rule 501 of Regulation D as promulgated under the
Securities Act and at least one of the following statements is an accurate
representation as to each source of funds (a "Source") to be used by it to pay
the purchase price of the Notes to be purchased by it hereunder:

                   (a)  the Source is an "insurance company general account"
         within the meaning of Department of Labor Prohibited Transaction
         Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no
         employee benefit plan, treating as a single plan all plans maintained
         by the same employer (or affiliate thereof as defined in Section
         V(a)(1) of PTE 95-60) or employee organization, with respect to which
         the amount of the general account reserves and liabilities for all
         contracts held by or on behalf of such plan exceeds ten percent (10%)
         of the total reserves and liabilities of such general account
         (exclusive of separate account liabilities) plus surplus, as set
         forth in the NAIC Annual Statement filed with such Purchaser's state
         of domicile; or

                   (b)  the Source is either (i) an insurance company pooled
         separate account, within the meaning of PTE 90-1 (issued January 29,
         1990), or (ii) a bank collective investment fund, within the meaning
         of the PTE 91-38 (issued July 12, 1991) and, except as such Purchaser
         has disclosed to the Company in writing pursuant to this paragraph
         (b), no employee benefit plan or group of plans maintained by the
         same employer or employee organization beneficially owns more than
         10% of all assets allocated to such pooled separate account or
         collective investment fund; or

                                     -4-

<PAGE>   8

                   (c)  the Source constitutes assets of an "investment fund"
         (within the meaning of Part V of the QPAM Exemption) managed by a
         "qualified professional asset manager" or "QPAM" (within the meaning
         of Part V of the QPAM Exemption), no employee benefit plan's assets
         that are included in such investment fund, when combined with the
         assets of all other employee benefit plans established or maintained
         by the same employer or by an affiliate (within the meaning of
         Section V(c)(1) of the QPAM Exemption) of such employer or by the
         same employee organization and managed by such QPAM, exceed 20% of
         the total client assets managed by such QPAM, the conditions of Part
         I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM
         nor a person controlling or controlled by the QPAM (applying the
         definition of "control" in Section V(e) of the QPAM Exemption) owns a
         5% or more interest in the Company and (i) the identity of such QPAM
         and (ii) the names of all employee benefit plans whose assets are
         included in such investment fund have been disclosed to the Company
         in writing pursuant to this paragraph (c); or

                   (d)  the Source is a governmental plan; or

                   (e)  the Source is one or more employee benefit plans, or a
         separate account or trust fund comprised of one or more employee
         benefit plans, each of which has been identified to the Company in
         writing pursuant to this paragraph (e); or

                   (f)  the Source does not include assets of any employee
         benefit plan, other than a plan exempt from the coverage of ERISA.

If any Purchaser or any subsequent transferee of the Notes indicates that such
Purchaser or such transferee is relying on any representation contained in
paragraphs (b), (c) or (e) above, the Company shall deliver on the date of
Closing and on the date of any applicable transfer a certificate, which shall
either state that (i) it is neither a party in interest nor a "disqualified
person" (as defined in Section 4975(e)(2) of the Code), with respect to any
plan identified pursuant to paragraphs (b) or (e) above, or (ii) with respect
to any plan, identified pursuant to paragraph (c) above, neither it nor any
"affiliate" (as defined in Section V(c) of the QPAM Exemption) has at such
time, and during the immediately preceding one year, exercised the authority
to appoint or terminate said QPAM as manager of any plan identified in writing
pursuant to paragraph (c) above or to negotiate the terms of said QPAM's
management agreement on behalf of any such identified plan.

         As used in this SECTION 3.2, the terms "employee benefit plan,"
"governmental plan," "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.

SECTION 4.           CLOSING CONDITIONS.

         Section 4.1.   Conditions. The obligation of each Purchaser to
purchase the Notes on the Closing Date shall be subject to the performance by
the Company of its agreements hereunder which by the terms hereof are to be
performed at or prior to the time of delivery of the Notes and to the
following further conditions precedent:

                                     -5-

<PAGE>   9

                   (a)  Closing Certificates. On the Closing Date such
         Purchaser shall have received a certificate dated the Closing Date,
         signed by the President or a Vice President or a Managing Director or
         a Principal of the Company, the truth and accuracy of which shall be
         a condition to such Purchaser's obligation to purchase the Notes
         proposed to be sold to such Purchaser on the Closing Date and to the
         effect that (i) the representations and warranties of the Company set
         forth in Exhibit B hereto are true and correct on and with respect to
         the Closing Date, (ii) the Company has performed all of its
         obligations hereunder which are to be performed on or prior to the
         Closing Date, and (iii) no Default or Event of Default has occurred
         and is continuing.

                   (b)  Legal Opinions. Such Purchaser shall have received
         from Chapman and Cutler, who are acting as special counsel to the
         Purchasers in this transaction, and from Sutherland Asbill & Brennan
         LLP, counsel for the Company, their respective opinions dated the
         Closing Date, in form and substance satisfactory to such Purchaser,
         and covering the matters set forth in Exhibits C and D, respectively,
         hereto.

                   (c)  Purchase Permitted By Applicable Law, Etc. On the
         Closing Date, each purchase of Notes shall (a) be permitted by the
         laws and regulations of each jurisdiction to which such Purchaser is
         subject, without recourse to provisions (such as Section 1405(a)(8)
         of the New York Insurance Law) permitting limited investments by
         insurance companies without restriction as to the character of the
         particular investment, (b) not violate any applicable law or
         regulation (including, without limitation, Regulation U, T or X of
         the Board of Governors of the Federal Reserve System) and (c) not
         subject any Purchaser to any tax, penalty or liability under or
         pursuant to any applicable law or regulation, which law or regulation
         was not in effect on the date hereof. If requested by any Purchaser,
         such Purchaser shall have received an officer's certificate
         certifying as to such matters of fact as such Purchaser may
         reasonably specify to enable such Purchaser to determine whether such
         purchase is so permitted.

                   (d)  Sale of Other Notes.  The Company shall have
         consummated the sale of the entire principal amount of the Notes
         scheduled to be sold on the Closing Date as specified in Schedule I.

                   (e)  Private Placement Number. A Private Placement Number
         issued by S&P's CUSIP Service Bureau (in cooperation with the
         Securities Valuation Office of the National Association of Insurance
         Commissioners) shall have been obtained for the Notes.

                   (f)  Satisfactory Proceedings. All proceedings taken in
         connection with the transactions contemplated by this Agreement, and
         all documents necessary to the consummation thereof, shall be
         satisfactory in form and substance to such Purchaser and such
         Purchaser's special counsel, and such Purchaser shall have received a
         copy (executed or certified as may be appropriate) of all legal
         documents or proceedings taken in connection with the consummation of
         said transactions.

                                     -6-

<PAGE>   10

         Section 4.2.   Waiver of Conditions. If on the Closing Date the
Company fails to tender to any Purchaser the Notes to be issued to such
Purchaser on such date or if the conditions specified in SECTION 4.1 have not
been fulfilled, such Purchaser may thereupon elect to be relieved of all
further obligations under this Agreement. Without limiting the foregoing, if
the conditions specified in SECTION 4.1 have not been fulfilled, such
Purchaser may waive compliance by the Company with any such condition to such
extent as such Purchaser may in its sole discretion determine. Nothing in this
SECTION 4.2 shall operate to relieve the Company of any of its obligations
hereunder or to waive any Purchaser's rights against the Company.

SECTION 5.           COVENANTS.

         From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:

         Section 5.1.   Corporate Existence, Etc. The Company will preserve
and keep in full force and effect, and will cause each Consolidated Subsidiary
to keep in full force and effect, its corporate existence and all
registrations, licenses, permits and governmental approvals necessary to the
proper conduct of its business except, in the case of a Consolidated
Subsidiary, where the failure to do so would not have a Material Adverse
Effect; provided, however, that the foregoing shall not prevent any
transaction permitted by SECTION 5.11.

         Section 5.2.   Insurance. The Company will maintain, and will cause
each Consolidated Subsidiary to maintain, insurance coverage by financially
sound and reputable insurers in such forms and amounts and against such risks
as are customary for corporations of established reputation engaged in the
same or a similar business and owning and operating similar properties.

         Section 5.3.   Taxes, Claims for Labor and Materials, Compliance with
Laws. The Company will promptly pay and discharge, and will cause each
Consolidated Subsidiary to pay and discharge, all lawful taxes, assessments
and governmental charges or levies imposed upon the Company or such
Consolidated Subsidiary, respectively, or upon or in respect of all or any
part of the property or business of the Company or such Consolidated
Subsidiary, all trade accounts payable in accordance with usual and customary
business terms, and all claims for work, labor or materials, which if unpaid
might become a Lien upon any property of the Company or such Consolidated
Subsidiary; provided, however, that the Company or such Consolidated
Subsidiary shall not be required to pay any such tax, assessment, charge,
levy, account payable or claim if (i) the validity, applicability or amount
thereof is being contested in good faith by appropriate actions or proceedings
which will prevent the forfeiture or sale of any property of the Company or
such Consolidated Subsidiary or any material interference with the use thereof
by the Company or such Consolidated Subsidiary, and (ii) the Company or such
Consolidated Subsidiary shall set aside on its books, reserves deemed by it to
be adequate with respect thereto. The Company will promptly comply and will
cause each Consolidated Subsidiary to promptly comply with all laws,
ordinances or governmental rules and regulations to which it is subject
including, without limitation, the Occupational Safety and Health Act of 1970,
as amended, ERISA and all laws, ordinances, governmental rules and regulations
relating

                                     -7-

<PAGE>   11

to environmental protection in all applicable jurisdictions, the violation of
which could have a Material Adverse Effect or would result in any Lien not
permitted under SECTION 5.9.

         Section 5.4.   Maintenance, Etc. The Company will maintain, preserve
and keep, and will cause each Consolidated Subsidiary to maintain, preserve
and keep, its properties which are used in the conduct of its business
(whether owned in fee or a leasehold interest) in good repair and working
order, ordinary wear and tear excepted, and from time to time will make all
necessary repairs, replacements and renewals as the Company may determine to
be appropriate to the conduct of its business.

         Section 5.5.   Nature of Business. Neither the Company nor any
Consolidated Subsidiary will engage in any business if, as a result, the
general nature of the business, taken on a consolidated basis, which would
then be engaged in by the Company and its Consolidated Subsidiaries would be
substantially changed from the general nature of the business engaged in by
the Company and its Consolidated Subsidiaries on the date of this Agreement as
described in the Memorandum.

         Section 5.6.   Capital Maintenance. The Company shall at all times
maintain Consolidated Shareholders Equity in an amount not less than (i)
$375,000,000 plus (ii) 75% of the Net Proceeds of all Equity Issuances
effected by the Company or any of its Consolidated Subsidiaries at any time
after September 30, 1998 (excluding the Net Proceeds of any Equity Issuance by
a Consolidated Subsidiary to a Consolidated Subsidiary or to the Company).

         Section 5.7.   Interest Charges Coverage Ratio. The Company shall
maintain the ratio of Adjusted EBIT to Interest Expense of the Company and its
Consolidated Subsidiaries, determined on a consolidated basis as of the last
day of each fiscal quarter for the period of four consecutive fiscal quarters
ending on such day, at not less than 1.8 to 1.

         Section 5.8.   Limitations on Debt; Interest Rate Swaps.  (a) The
Company will have on the last day of each quarterly fiscal period a ratio of
Consolidated Debt to Consolidated Shareholders' Equity not exceeding 1.5 to 1.

         (b)     The Company will not at any time permit the aggregate
principal amount of Priority Debt to exceed 25% of Consolidated Shareholders'
Equity; provided that in the case of any determination of Priority Debt made
prior to April 30, 2001, outstanding Indebtedness secured by Real Estate
Assets in an aggregate principal amount of up to $100,000,000 shall be
excluded from Priority Debt.

         (c)     The Company will not at any time permit the Asset Coverage
Ratio to be less than 2 to 1.

         (d)     The Company will not permit any Consolidated Subsidiary to
enter into any Subsidiary Bank Guaranty or Subsidiary Existing Note Guaranty,
unless the Company shall first furnish to each Holder of the Notes (i) an
unconditional Subsidiary Note Guaranty, (ii) an Intercreditor Agreement, and
(iii) an opinion of counsel to the effect that such Subsidiary Note Guaranty
has been duly authorized, executed and delivered by such Consolidated
Subsidiary and

                                     -8-

<PAGE>   12
constitutes the legal, valid and binding obligation of such Consolidated
Subsidiary, enforceable against such Consolidated Subsidiary in accordance with
the terms thereof, and covering such other matters as the Holders of 51% or more
of the principal amount of the Notes at the time outstanding may reasonably
request.

         (e)     The Company will not and will not permit any Consolidated
Subsidiary to enter into any Interest Rate Swap except in the ordinary course
of business pursuant to transactions that are entered into for bona fide
purposes of managing the Company's interest rate risk and not for speculation.

         Section 5.9.   Limitation on Liens. The Company will not, and will
not permit any Consolidated Subsidiary to, create or incur, or suffer to be
incurred or to exist, any Lien on its or their property or assets, whether now
owned or hereafter acquired, or upon any income or profits therefrom, or
transfer any property for the purpose of subjecting the same to the payment of
obligations in priority to the payment of its or their general creditors, or
acquire or agree to acquire any property or assets upon conditional sales
agreements or other title retention devices, except:

                   (a)  Liens for property taxes and assessments or
         governmental charges or levies and Liens securing claims or demands
         of mechanics and materialmen, provided payment thereof is not at the
         time required by SECTION 5.3;

                   (b)  Liens of or resulting from any judgment or award, the
         time for the appeal or petition for rehearing of which shall not have
         expired, or in respect of which the Company or a Consolidated
         Subsidiary shall at any time in good faith be prosecuting an appeal
         or proceeding for a review and in respect of which a stay of
         execution pending such appeal or proceeding for review shall have
         been secured;

                   (c)  Liens incidental to the conduct of business or the
         ownership of properties and assets (including Liens in connection
         with the making of loans to customers, worker's compensation,
         unemployment insurance and other like laws, warehousemen's and
         attorneys' liens and statutory landlords' liens) and Liens to secure
         the performance of bids, tenders or trade contracts, or to secure
         statutory obligations, surety or appeal bonds or other Liens of like
         general nature incurred in the ordinary course of business and not in
         connection with (i) the borrowing of money or (ii) obligations
         pursuant to ERISA, provided in each case, the obligation secured is
         not overdue or, if overdue, is being contested in good faith by
         appropriate actions or proceedings;

                   (d)  minor survey exceptions or minor encumbrances,
         easements or reservations, or rights of others for rights-of-way,
         utilities and other similar purposes, or zoning or other restrictions
         as to the use of real properties, which are necessary for the conduct
         of the activities of the Company and its Consolidated Subsidiaries or
         which customarily exist on properties of corporations engaged in
         similar activities and similarly situated and which do not in any
         event materially impair their use in the operation of the business of
         the Company and its Consolidated Subsidiaries;

                                     -9-

<PAGE>   13

                   (e)  Liens securing Indebtedness of a Consolidated
         Subsidiary to the Company or to another Wholly-owned Consolidated
         Subsidiary;

                   (f)  Liens existing as of September 30, 2000 and reflected
         on Annex B to Exhibit B hereto;

                   (g)  Liens incurred after the Closing Date given to secure
         the payment of the purchase price or cost of construction incurred in
         connection with the acquisition of, or improvements to, fixed assets
         useful and intended to be used in carrying on the business of the
         Company or a Consolidated Subsidiary, including Liens existing on
         such assets at the time of acquisition thereof or at the time of
         acquisition by the Company or a Consolidated Subsidiary of any
         business entity then owning such assets, whether or not such existing
         Liens were given to secure the payment of the purchase price of the
         assets to which they attach so long as they were not incurred,
         extended or renewed in contemplation of such acquisition, provided
         that (i) the Lien shall attach solely to the assets acquired or
         purchased, (ii) the Lien (other than Liens that are existing on such
         assets at the time of acquisition thereof and that are permitted as
         aforesaid) shall have been created or incurred within 180 days of the
         date of acquisition of such fixed assets, except in the case of
         construction or acquisition of improvements to real estate, the land
         on which such improvements are located shall not be required to have
         been acquired within such 180 period; (iii) at the time of
         acquisition of such assets, the aggregate amount remaining unpaid on
         all Indebtedness secured by Liens on such assets whether or not
         assumed by the Company or a Consolidated Subsidiary shall not exceed
         an amount equal to 80% (or 100% in the case of Capitalized Leases) of
         the lesser of the total purchase price or fair market value at the
         time of acquisition of such assets (as determined in good faith by
         the Board of Directors of the Company), and (iv) all Indebtedness
         secured by such Liens shall be permitted hereunder;

                   (h)  Liens on Real Estate Assets securing Non-Recourse
         Indebtedness; provided that such Non-Recourse Indebtedness shall be
         permitted within the limitations of SECTION 5.8; and

                   (i)  Liens securing Indebtedness under Mortgage Repurchase
         Facilities or Interest Rate Swaps; provided that (i) the Lien of any
         such Mortgage Repurchase Facility shall extend only to the Commercial
         Mortgage Loans which are financed or refinanced under such Mortgage
         Repurchase Facility and the Related Collateral, (ii) the aggregate
         advances under such Mortgage Repurchase Facility shall not exceed 80%
         of the aggregate unpaid principal amount of the Commercial Mortgage
         Loans securing such Mortgage Repurchase Facility, (iii) the Lien
         securing any Interest Rate Swap shall extend only to Commercial
         Mortgage Loans and Related Collateral, and (iv) all such Indebtedness
         shall be permitted within the limitations of SECTION 5.8.

         The Company will not, and will not permit any Consolidated Subsidiary
to, directly or indirectly, create, incur, assume or permit to exist (upon the
happening of a contingency or otherwise) any Lien on or with respect to any
property which secures Debt outstanding under the Bank Credit Agreement or the
Existing Note Agreements, unless the Company makes, or causes

                                     -10-

<PAGE>   14

to be made, effective provision whereby the Notes will be equally and ratably
secured with any and all other obligations thereby secured; provided that such
security is granted pursuant to an agreement reasonably satisfactory to the
Holders of 51% or more of the principal amount of the Notes at the time
outstanding.

        Section 5.10.   Restricted Payments.  The Company will not except as
hereinafter provided:

                   (a)  Declare or pay any dividends, either in cash or
         property, on any shares of its capital stock of any class (except
         dividends or other distributions payable solely in shares of capital
         stock of the Company);

                   (b)  Directly or indirectly, or through any Subsidiary,
         purchase, redeem or retire any shares of its capital stock of any
         class or any warrants, rights or options to purchase or acquire any
         shares of its capital stock (other than in exchange for or out of the
         net cash proceeds to the Company from the substantially concurrent
         issue or sale of other shares of capital stock of the Company or
         warrants, rights or options to purchase or acquire any shares of its
         capital stock); or

                   (c)  Make any other payment or distribution, either
         directly or indirectly or through any Subsidiary, in respect of its
         capital stock;

(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options and all such
other payments or distributions being herein collectively called "Restricted
Payments"), if after giving effect thereto (i) an Event of Default described
in paragraph (a) or (b) of SECTION 6.1 shall exist, (ii) as the result of an
occurrence of any other Event of Default described in SECTION 6.1 the Notes
shall have been accelerated under SECTION 6.3 or (iii) the Company would not
be in compliance with the limitations of SECTION 5.8.

         The Company will not declare any regular quarterly dividend which
constitutes a Restricted Payment payable more than 60 days after the date of
declaration thereof; provided that any year-end extra dividend which
constitutes a Restricted Payment shall not be payable more than 120 days after
the date of declaration thereof.

         For the purposes of this SECTION 5.10, the amount of any Restricted
Payment declared, paid or distributed in property shall be deemed to be the
greater of the book value or fair market value (as determined in good faith by
the Board of Directors of the Company) of such property at the time of the
making of the Restricted Payment in question.

        Section 5.11.   Mergers, Consolidations and Sales of Assets. (a) The
Company will not, and will not permit any Consolidated Subsidiary to,
consolidate with or be a party to a merger with any other Person or dispose of
all or a substantial part of the assets of the Company and its Consolidated
Subsidiaries; provided that:

                   (1)  any Consolidated Subsidiary may merge or consolidate
         with or into, sell, lease or otherwise dispose of all or a
         substantial part of its assets to the Company or any Wholly-owned
         Subsidiary so long as (A) (i) in any merger or consolidation
         involving the

                                     -11-

<PAGE>   15

         Company, the Company shall be the surviving or continuing corporation
         and (ii) in any merger or consolidation involving a Wholly-owned
         Subsidiary (and not the Company), a Wholly-owned Subsidiary shall be
         the surviving or continuing corporation, and (B) at the time of such
         consolidation or merger and immediately after giving effect thereto,
         no Default or Event of Default would exist;

                   (2)  the Company may consolidate or merge with or into any
         other corporation if (i) the corporation which results from such
         consolidation or merger (the "surviving corporation") is organized
         under the laws of any state of the United States or the District of
         Columbia, (ii) the due and punctual payment of the principal of and
         premium, if any, and interest on all of the Notes, according to their
         tenor, and the due and punctual performance and observation of all of
         the covenants in the Notes and this Agreement, to be performed or
         observed by the Company are expressly assumed in writing by the
         surviving corporation and the surviving corporation shall furnish to
         the holders of the Notes an opinion of counsel reasonably
         satisfactory to the Holder or Holders of 51% or more of the principal
         amount of the Notes at the time outstanding to the effect that the
         instrument of assumption has been duly authorized, executed and
         delivered and constitutes the legal, valid and binding contract and
         agreement of the surviving corporation enforceable in accordance with
         its terms, except as enforcement of such terms may be limited by
         bankruptcy, insolvency, reorganization, moratorium and similar laws
         affecting the enforcement of creditors' rights generally and by
         general equitable principles, and (iii) at the time of such
         consolidation or merger and immediately after giving effect thereto
         and to the incurrence of any Debt assumed or incurred in connection
         therewith, (x) the aggregate amount of outstanding Consolidated Debt
         and Priority Debt of the surviving corporation would be permitted by
         the terms of SECTION 5.8 as of the last day of the fiscal quarter
         immediately preceding the date of such consolidation or merger, and
         (y) no Default or Event of Default would exist; and

                   (3)  the Company and any Consolidated Subsidiary may, sell,
         transfer or otherwise dispose of all or any part of its Investments
         in the ordinary course of business including, without limitation, in
         securitization transactions.

         (b)     The Company will not permit any Consolidated Subsidiary to
issue any Voting Stock of such Consolidated Subsidiary except to satisfy the
rights of minority shareholders to receive issuances of stock which are
non-dilutive to the Company and/or any Consolidated Subsidiary; provided that
the foregoing restrictions do not apply to issuances to the Company or to a
Wholly-owned Subsidiary or the issuance of directors' qualifying shares.

         (c)     The Company will not sell, transfer or otherwise dispose of
stock or Debt of any Consolidated Subsidiary (except issuance of directors'
qualifying shares and sales, transfers and dispositions of all the stock of a
special purpose Consolidated Subsidiary for consideration if (x) substantially
all the assets of such Consolidated Subsidiary constitute Investments and (y)
the sale, transfer or disposition of all such Investments for substantially
the same consideration would be permitted by SECTION 5.11(a)(3)) and will not
permit any Consolidated Subsidiary to sell, transfer or otherwise dispose of
stock (otherwise than by purchase or redemption of preferred stock) of a
Consolidated Subsidiary or Debt of any other Consolidated Subsidiary (except

                                     -12-

<PAGE>   16

issuances to the Company or to a Wholly-owned Subsidiary or issuance of
directors' qualifying shares); provided that the foregoing restrictions do not
apply if the following conditions are met:

                   (1)  all shares of stock   and all Debt of such
         Consolidated Subsidiary held by the Company and its Subsidiaries
         shall be sold simultaneously;

                   (2)  in the opinion of the Company's Board of Directors:

                         (i)   such sale of stock or Debt is in the best
                        interests of the Company; and

                         (ii)   the consideration paid for such stock and Debt
                        is deemed adequate and satisfactory.

                   (3)  the Consolidated Subsidiary being disposed of shall
         not have any continuing investment in the Company or any Consolidated
         Subsidiary that is not being disposed of simultaneously; and

                   (4)  such sale or disposition does not involve a
         substantial part of assets of the Company and its Consolidated
         Subsidiaries.

         As used in this SECTION 5.11, a sale of assets will be deemed a
"substantial part" of the assets of the Company and its Consolidated
Subsidiaries if (i) the Book Value of such assets sold in a given fiscal year
(except those sold in the ordinary course of business) exceeds 15% of the
Consolidated Total Assets of the Company and its Consolidated Subsidiaries
determined at the close of the immediately preceding fiscal year, or (ii) the
operations of such assets sold (except those sold in the ordinary course of
business) generated 15% or more of the consolidated operating profit of the
Company and its Consolidated Subsidiaries during the immediately preceding
fiscal year; provided, however, that for purposes of the foregoing
calculation, there shall not be included any assets if a portion of the
proceeds of such assets equal to the aggregate Book Value thereof immediately
prior to such sale was or is applied within 365 days of the date of sale of
such assets to either (A) the acquisition of Investments useful and intended
to be used in the operation of the business of the Company and its
Consolidated Subsidiaries and having a fair market value (as determined in
good faith by the Board of Directors of the Company) at least equal to the
Book Value of the assets so disposed of, or (B) the prepayment at any
applicable prepayment premium, on a pro rata basis, of Senior Funded Debt of
the Company. It is understood and agreed by the Company that any such proceeds
paid and applied to the prepayment of the Notes as hereinabove provided shall
be prepaid as and to the extent provided in SECTION 2.2.

        Section 5.12.   Repurchase of Notes. Neither the Company nor any
Consolidated Subsidiary or Affiliate, directly or indirectly, may repurchase
or make any offer to repurchase any Notes unless an offer has been made to
repurchase Notes, pro rata, from all holders of the Notes at the same time and
upon the same terms. In case the Company repurchases or otherwise acquires any
Notes, such Notes shall immediately thereafter be canceled and no Notes shall
be issued in substitution therefor. Without limiting the foregoing, upon the
repurchase or other

                                     -13-

<PAGE>   17

acquisition of any Notes by the Company, any Consolidated Subsidiary or any
Affiliate, such Notes shall no longer be outstanding for purposes of any
section of this Agreement relating to the taking by the holders of the Notes
of any actions with respect hereto, including without limitation, SECTION 6.3,
SECTION 6.4 and SECTION 7.1.

        Section 5.13.   Transactions with Affiliates. The Company will not,
and will not permit any Consolidated Subsidiary to, enter into or be a party
to any transaction or arrangement with any Affiliate (including, without
limitation, the purchase from, sale to or exchange of property with, or the
rendering of any service by or for, any Affiliate), except transactions in the
ordinary course of and pursuant to the reasonable requirements of the
Company's or such Consolidated Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such Consolidated
Subsidiary than would be obtained in a comparable arm's-length transaction
with a Person other than an Affiliate.

        Section 5.14.   Termination of Pension Plans. The Company will not,
and will not permit any Consolidated Subsidiary to, withdraw from any
Multiemployer Plan to which it may hereafter contribute or permit any employee
benefit plan hereafter maintained by it to be terminated if such withdrawal or
termination could result in withdrawal liability (as described in Part 1 of
Subtitle E of Title IV of ERISA) or the imposition of a Lien on any property
of the Company or any Consolidated Subsidiary pursuant to Section 4068 of
ERISA.

        Section 5.15.   Reports and Rights of Inspection. The Company will
keep, and will cause each Consolidated Subsidiary to keep, proper books of
record and account in which full and correct entries will be made of all
dealings or transactions of, or in relation to, the business and affairs of
the Company or such Consolidated Subsidiary, in accordance with GAAP
consistently applied (except for changes disclosed in the financial statements
furnished to the Holders pursuant to this SECTION 5.15 and concurred with by
the independent public accountants referred to in SECTION 5.15(b) hereof), and
will furnish to each Institutional Holder of the then outstanding Notes (in
duplicate if so specified below or otherwise requested):

                   (a)  Quarterly Statements.  As soon as available and in any
         event within 45 days after the end of each quarterly fiscal period
         (except the last) of each fiscal year, copies of:

                        (1)  consolidated balance sheets of the Company and
                  its Consolidated Subsidiaries as of the close of such
                  quarterly fiscal period, setting forth in comparative form
                  the consolidated figures for the fiscal year then most
                  recently ended,

                        (2)  consolidated statements of operations of the
                  Company and its Consolidated Subsidiaries for such quarterly
                  fiscal period and for the portion of the fiscal year ending
                  with such quarterly fiscal period, in each case setting
                  forth in comparative form the consolidated figures for the
                  corresponding periods of the preceding fiscal year, and

                                     -14-

<PAGE>   18

                        (3)  consolidated statements of changes in net assets
                  and cash flows of the Company and its Consolidated
                  Subsidiaries for the portion of the fiscal year ending with
                  such quarterly fiscal period, setting forth in comparative
                  form the consolidated figures for the corresponding period
                  of the preceding fiscal year,

         all in reasonable detail and certified as complete and correct by a
         Senior Financial Officer of the Company;

                   (b)  Annual Statements.  As soon as available and in any
         event within 90 days after the close of each fiscal year, copies of:

                        (1)  consolidated and consolidating balance sheets of
                  the Company and its Consolidated Subsidiaries as of the
                  close of such fiscal year,

                        (2)   consolidated statements of operations, changes
                  in net assets and cash flows, and consolidating statements
                  of operations and cash flows, and

                        (3)   consolidated statement of investments

         setting forth in comparative form the consolidated figures for the
         preceding fiscal year (except in the case of such statement of
         investments) and in each case all in reasonable detail and
         accompanied by a report thereon of a firm of independent public
         accountants of recognized national standing selected by the Company
         to the effect that the consolidated financial statements present
         fairly, in all material respects, the consolidated financial position
         of the Company and its Consolidated Subsidiaries as of the end of the
         fiscal year being reported on and the consolidated results of their
         operations, changes in net assets and cash flows for said year in
         conformity with GAAP and that the examination of such accountants in
         connection with such financial statements has been conducted in
         accordance with generally accepted auditing standards and included
         such tests of the accounting records and such other auditing
         procedures as said accountants deemed necessary in the circumstances;

                   (c)  Audit Reports.  Promptly upon receipt thereof, one
         copy of each interim or special audit made by independent accountants
         of the books of the Company or any Consolidated Subsidiary and any
         management letter received from such accountants;

                   (d)  SEC and Other Reports. Promptly upon their becoming
         available, one copy of each financial statement, report, notice,
         press releases or proxy statement sent by the Company to stockholders
         generally and of each regular or periodic report, and any
         registration statement or prospectus filed by the Company with any
         securities exchange or the Securities and Exchange Commission or any
         successor agency, and copies of any orders in any proceedings to
         which the Company or any Consolidated Subsidiary is a party, issued
         by any governmental agency, Federal or state, having jurisdiction
         over the Company or any of its Consolidated Subsidiaries;

                                     -15-

<PAGE>   19

                   (e)  ERISA Reports. Promptly upon the occurrence thereof,
         written notice of (i) a Reportable Event with respect to any Plan
         hereafter maintained by the Company or any ERISA Affiliate; (ii) the
         institution of any steps by the Company, any ERISA Affiliate, the
         PBGC or any other person to terminate any such Plan; (iii) the
         institution of any steps by the Company or any ERISA Affiliate to
         withdraw from any such Plan; (iv) a non-exempt "prohibited
         transaction" within the meaning of Section 406 of ERISA in connection
         with any such Plan; (v) any material contingent liability of the
         Company or any Consolidated Subsidiary with respect to any
         post-retirement welfare liability hereafter existing; or (vi) the
         taking of any action by, or the threatening of the taking of any
         action by, the Internal Revenue Service, the Department of Labor or
         the PBGC with respect to any of the foregoing;

                   (f)  Officer's Certificates. Within the periods provided in
         paragraphs (a) and (b) above, a certificate of a Senior Financial
         Officer of the Company stating that such officer has reviewed the
         provisions of this Agreement and setting forth: (i) the information
         and computations (in sufficient detail) required in order to
         establish whether the Company was in compliance with the requirements
         of SECTION 5.6 through SECTION 5.11 at the end of the period covered
         by the financial statements then being furnished and (ii) whether
         there existed as of the date of such financial statements and
         whether, to the best of such officer's knowledge, there exists on the
         date of the certificate or existed at any time during the period
         covered by such financial statements any Default or Event of Default
         and, if any such condition or event exists on the date of the
         certificate, specifying the nature and period of existence thereof
         and the action the Company is taking and proposes to take with
         respect thereto;

                   (g)  Accountant's Certificates. Within the period provided
         in paragraph (b) above, a certificate of the accountants who render
         an opinion with respect to such financial statements acknowledging
         that the Company was in compliance with the financial covenants of
         SECTION 5.6, SECTION 5.7 and SECTION 5.8(a), (b) and (c), and setting
         forth the procedures used to make such determination; and

                   (h)  Requested Information.  With reasonable promptness,
         such other data and information as any Holder or any such
         Institutional Holder may reasonably request.

         Without limiting the foregoing, the Company will permit each
Institutional Holder of the then outstanding Notes (or such Persons as such
Holder may designate), to visit and inspect, under the Company's guidance, any
of the properties of the Company or any Consolidated Subsidiary, to examine
all of their books of account, records, reports and other papers, to make
copies and extracts therefrom and to discuss their respective affairs,
finances and accounts with their respective officers, employees, and
independent public accountants (and by this provision the Company authorizes
said accountants to discuss with such Holder the finances and affairs of the
Company and its Consolidated Subsidiaries) all at such reasonable times and as
often as may be reasonably requested. Any visitation shall be at the sole
expense of such Institutional Holder, unless a Default or Event of Default
shall have occurred and be continuing or the Holder of any Note or of any
other evidence of Indebtedness of the Company or any Consolidated Subsidiary

                                     -16-

<PAGE>   20

gives any written notice or takes any other action with respect to a claimed
default, in which case, any such visitation or inspection shall be at the sole
expense of the Company.

SECTION 6.           EVENTS OF DEFAULT AND REMEDIES THEREFOR.

         Section 6.1.   Events of Default.  Any one or more of the following
shall constitute an "Event of Default" as such term is used herein:

                   (a)  Default shall occur in the payment of interest on any
         Note when the same shall have become due and such default shall
         continue for more than five Business Days; or

                   (b)  Default shall occur in the making of any payment of
         the principal of any Note or premium, if any, thereon at the
         expressed or any accelerated maturity date or at any date fixed for
         prepayment; or

                   (c)  Default shall be made in the payment when due (whether
         by lapse of time, by declaration, by call for redemption or
         otherwise) of the principal of or interest on any Consolidated Debt
         (other than the Notes) of the Company or any Consolidated Subsidiary
         having an aggregate unpaid principal amount in excess of $15,000,000
         and such default shall continue beyond the period of grace, if any,
         allowed with respect thereto; or

                   (d)  Default or the happening of any event shall occur
         under any indenture, agreement or other instrument under which
         Consolidated Debt of the Company or any Consolidated Subsidiary
         having an aggregate unpaid principal amount in excess of $15,000,000
         may be issued and such default or event shall continue for a period
         of time sufficient to permit the acceleration of the maturity of such
         Consolidated Debt or the Company or a Consolidated Subsidiary has
         become obligated to purchase such Consolidated Debt or one or more
         Persons have the right to require the Company or any Consolidated
         Subsidiary to purchase such Consolidated Debt; or

                   (e)  Default shall occur in the observance or performance
         of any covenant or agreement contained in SECTION 5.6 through SECTION
         5.11 and such default shall continue for more than five Business
         Days; or

                   (f)  Default shall occur in the observance or performance
         of any other provision of this Agreement which is not remedied within
         30 days after the earlier of (i) the day on which a Senior Financial
         Officer first obtains actual personal knowledge of such default, or
         (ii) the day on which written notice thereof is given to the Company
         by the Holder of any Note; or

                   (g)  Any representation or warranty made by the Company
         herein, or made by the Company in any statement or certificate
         furnished by the Company in connection with the consummation of the
         issuance and delivery of the Notes or furnished by the Company
         pursuant hereto, is untrue in any material respect as of the date of
         the issuance or making thereof; or

                                     -17-

<PAGE>   21

                   (h)  Final judgment or final judgments for the payment of
         money aggregating in excess of $15,000,000 is or are outstanding
         against the Company or any Material Subsidiary or against any
         property or assets of the Company or any Material Subsidiary and any
         such final judgment or final judgments have remained unpaid,
         unvacated, unbonded or unstayed by appeal or otherwise for a period
         of 60 days from the date of its entry; or

                   (i)  A custodian, liquidator, receiver or similar official
         is appointed for the Company or any Material Subsidiary or for the
         major part of its property and is not discharged within 60 days after
         such appointment; or

                   (j)  The Company or any Material Subsidiary becomes
         insolvent or bankrupt, is generally not paying its debts as they
         become due or makes an assignment for the benefit of creditors, or
         the Company or any Material Subsidiary applies for or consents to the
         appointment of a custodian, liquidator, trustee or receiver for the
         Company or such Material Subsidiary or for the major part of its
         property; or

                   (k)  Bankruptcy, reorganization, arrangement or insolvency
         proceedings, or other proceedings for relief under any bankruptcy or
         similar law or laws for the relief of debtors, are instituted by or
         against the Company or any Material Subsidiary and, if instituted
         against the Company or such Material Subsidiary, are consented to or
         are not dismissed within 60 days after such institution.

         Section 6.2.   Notice to Holders. When any Event of Default described
in the foregoing SECTION 6.1 has occurred, or if the Holder of any Note or of
any other evidence of Debt of the Company gives any notice or takes any other
action with respect to a claimed default, the Company agrees to give notice
within three Business Days of such event to all holders of the Notes then
outstanding.

         Section 6.3.   Acceleration of Maturities. When any Event of Default
described in paragraph (a) or (b) of SECTION 6.1 has happened and is
continuing, any Holder of any Note may declare the entire principal and all
interest accrued on such Holder's Notes to be and such Notes shall thereupon
become, forthwith due and payable, without any presentment, demand, protest or
other notice of any kind, all of which are hereby waived. When any Event of
Default described in paragraphs (a) through (i), inclusive, of SECTION 6.1 has
happened and is continuing, the Holder or Holders of 51% or more of the
principal amount of Notes at the time outstanding may, by notice to the
Company, declare the entire principal and all interest accrued on all Notes to
be, and all Notes shall thereupon become, forthwith due and payable, without
any presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived. When any Event of Default described in paragraph (j)
or (k) of SECTION 6.1 has occurred, then all outstanding Notes shall
immediately become due and payable without presentment, demand or notice of
any kind. Upon any Note becoming due and payable as a result of any Event of
Default as aforesaid, the Company will forthwith pay to the Holder of such
Note the entire principal and interest accrued on such Note and (to the extent
permitted by applicable law) an amount as liquidated damages for the loss of
the bargain evidenced hereby (and not as a penalty) equal to the applicable
Series A Make-Whole Amount or Series B Premium Amount which the Company would
be

                                     -18-

<PAGE>   22

obligated to pay if the Notes were being prepaid pursuant to SECTION 2.2,
determined as of the date on which such Note shall so become due and payable.
No course of dealing on the part of the Holder or Holders of any Notes nor any
delay or failure on the part of any Holder of Notes to exercise any right
shall operate as a waiver of such right or otherwise prejudice such Holder's
rights, powers and remedies. The Company further agrees, to the extent
permitted by law, to pay to the Holder or Holders of the Notes all costs and
expenses incurred by them in the collection of any Notes upon any default
hereunder or thereon, including reasonable compensation to such Holder's or
Holders' attorneys for all services rendered in connection therewith.

         Section 6.4.   Rescission of Acceleration. The provisions of SECTION
6.3 are subject to the condition that if the principal of and accrued interest
on all or any outstanding Notes have been declared immediately due and payable
by reason of the occurrence of any Event of Default described in paragraphs
(a) through (i), inclusive, of SECTION 6.1, the holders of 66-2/3% in
aggregate principal amount of the Notes then outstanding may, by written
instrument filed with the Company, rescind and annul such declaration and the
consequences thereof, provided that at the time such declaration is annulled
and rescinded:

                   (a)  no judgment or decree has been entered for the payment
         of any monies due pursuant to the Notes or this Agreement;

                   (b)  all arrears of interest upon all the Notes and all
         other sums payable under the Notes and under this Agreement (except
         any principal, interest or premium on the Notes which has become due
         and payable solely by reason of such declaration under SECTION 6.3)
         shall have been duly paid; and

                   (c)  each and every other Default and Event of Default
         shall have been made good, cured or waived pursuant to SECTION 7.1;

and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereto.

SECTION 7.           AMENDMENTS, WAIVERS AND CONSENTS.

         Section 7.1.   Consent Required. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended
or compliance therewith may be waived (either generally or in a particular
instance and either retroactively or prospectively), if the Company has
obtained the consent in writing of the Holders of at least 51% in aggregate
principal amount of outstanding Notes; provided that without the written
consent of the Holders of all of the Notes then outstanding, no such amendment
or waiver shall be effective (i) which will change the time of payment of the
principal of or the interest on any Note, change the principal amount thereof,
reduce the rate of interest thereon or change the method of computation of the
Series A Make-Whole Amount or the Series B Premium Amount, or (ii) which will
change any of the provisions with respect to optional prepayments or (iii)
which will change the percentage of holders of the Notes required to consent
to any such amendment or waiver of any of the provisions of this SECTION 7 or
SECTION 6.

                                     -19-

<PAGE>   23

         Section 7.2.   Solicitation of Holders. So long as there are any
Notes outstanding, the Company will not solicit, request or negotiate for or
with respect to any proposed waiver or amendment of any of the provisions of
this Agreement or the Notes unless each Holder of Notes (irrespective of the
amount of Notes then owned by it) shall be informed thereof by the Company and
shall be afforded the opportunity of considering the same and shall be
supplied by the Company with sufficient information to enable it to make an
informed decision with respect thereto. The Company will not, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any Holder of Notes
as consideration for or as an inducement to entering into by any Holder of
Notes of any waiver or amendment of any of the terms and provisions of this
Agreement or the Notes unless such remuneration is concurrently paid on the
same terms, ratably to each Holder of Notes then outstanding even if such
Holder did not consent to such waiver or amendment.

         Section 7.3.   Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the Holders of the Notes and shall be
binding upon them, upon each future Holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation
not expressly amended or waived or impair any right consequent thereon.

SECTION 8.           INTERPRETATION OF AGREEMENT; DEFINITIONS.

         Section 8.1.   Definitions. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined:

         "Adjusted EBIT" means, for any period with respect to the Company and
its Consolidated Subsidiaries on a consolidated basis, income after deduction
of all expenses and other proper charges other than taxes and Interest
Expense, all as determined in accordance with GAAP.

         "Affiliate" shall mean any Person (other than a Consolidated
Subsidiary) which (i) directly or indirectly, or through one or more
intermediaries controls, or is controlled by, or is under common control with,
the Company, (ii) which beneficially owns or holds 5% or more of any class of
the Voting Stock of the Company or (iii) 5% or more of the Voting Stock (or in
the case of a Person which is not a corporation, 5% or more of the equity
interest) of which is beneficially owned by the Company or a Subsidiary. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Voting Stock, by contract or otherwise, other
than by investment advisory contracts entered into in the ordinary course of
business of the Company or a Subsidiary of the Company.

         "Asset Coverage Ratio" shall mean on a consolidated basis for the
Company and its Consolidated Subsidiaries the ratio which the value of total
assets, less all liabilities and indebtedness not represented by senior
securities (all as determined pursuant to the Investment Company Act and any
orders of the Securities and Exchange Commission issued to the

                                     -20-

<PAGE>   24

Company thereunder), bears to the aggregate amount of senior securities
representing indebtedness of the Company and its Consolidated Subsidiaries

         "Bank Credit Agreement" means the Amended and Restated Credit
Agreement between the Banks and the Company dated as of May 17, 2000, as
amended from time to time, pursuant to which the Banks have extended credit to
the Company, and any renewals, extensions or replacements thereof.

         "Banks" means the banks or financial institutions which are party to
the Bank Credit Agreement from time to time.

         "Book Value" means, with respect to any asset at any time, the value
thereof as the same would be reflected on a consolidated balance sheet of the
Company and its Consolidated Subsidiaries as at such time prepared in
accordance with GAAP.

         "Business Day" shall mean (a) for the purposes of computation of the
Series A Make-Whole Amount only, any day of the week (excluding Saturday or
Sunday) on which banks in New York, New York are not obligated by law to
close, (b) for the purpose of computation of the Series B Rate only, any day
of the week (excluding Saturday or Sunday) on which banks in London, England
are not obligated by law to close, and (c) for the purposes of any other
provision of this Agreement any day of the week (excluding Saturday or Sunday)
on which banks in Washington, D.C., New York, New York are not obligated by
law to close.

         "Capitalized Lease" shall mean any lease the obligation for Rentals
with respect to which is required to be capitalized on a consolidated balance
sheet of the lessee and its subsidiaries in accordance with GAAP.

         "Capitalized Rentals" of any Person shall mean as of the date of any
determination thereof the amount at which the aggregate Rentals due and to
become due under all Capitalized Leases under which such Person is a lessee
would be reflected as a liability on a consolidated balance sheet of such
Person.

         "Code" shall mean the Internal Revenue Code of 1986, as amended and
the rules and regulations promulgated thereunder.

         "Commercial Mortgage Loan" means a loan secured by a Lien on improved
real estate used for commercial purposes.

         "Consolidated Debt" shall mean as of the date of any determination
thereof, the aggregate unpaid amount of all Debt of the Company and its
Consolidated Subsidiaries determined on a consolidated basis in accordance
with GAAP.

         "Consolidated Shareholders' Equity" as of the date of determination
thereof, shall mean the total shareholders' equity of the Company and its
Consolidated Subsidiaries as the same would appear on a consolidated balance
sheet of the Company and its Consolidated Subsidiaries prepared as of such
date in accordance with GAAP, including, in any case, common stock of the

                                     -21-

<PAGE>   25

Company (valued at cost) held in the Allied Capital Corporation Deferred
Compensation Trust and Permitted Preferred Stock of the Company and its
Consolidated Subsidiaries but excluding any stock, common or preferred, not
both issued and outstanding.

         "Consolidated Subsidiary" shall mean any Subsidiary which is required
to be consolidated on financial statements of the Company prepared in
accordance with GAAP.

         "Consolidated Total Assets" shall mean total assets of the Company
and its Consolidated Subsidiaries on a consolidated basis.

         "Debt" means, with respect to any Person, without duplication,

                   (a)  its liabilities for borrowed money;

                   (b)  its liabilities for the deferred purchase price of
         property acquired by such Person (excluding accounts payable arising
         in the ordinary course of business but including, without limitation,
         all liabilities created or arising under any conditional sale or
         other title retention agreement with respect to any such property);

                   (c)  its Capitalized Rentals;

                   (d)  all liabilities for borrowed money secured by any Lien
         with respect to any property owned by such Person (whether or not it
         has assumed or otherwise become liable for such liabilities); and

                   (e)  any Guaranty of such Person with respect to
         liabilities of a type described in any of clauses (a) through (d)
         hereof.

Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.

         "Default" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.

         "Equity Issuance" means any issuance or sale by a Person of its
capital stock or other similar equity security, or any warrants, options or
similar rights to acquire, or securities convertible into or exchangeable for,
such capital stock or other similar equity security.

         "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with
the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.

         "ERISA Affiliate" shall mean any corporation, trade or business that
is, along with the Company, a member of a controlled group of corporations or
a controlled group of trades or

                                     -22-

<PAGE>   26

businesses, as described in section 414(b) and 414(c), respectively, of the
Code or Section 4001 of ERISA.

         "Event of Default" shall have the meaning set forth in SECTION 6.1.

         "Existing Notes" means the notes issued by the Company pursuant to
the Existing Note Agreements.

         "Existing Note Agreements" means (i) the Note Agreement dated as of
April 30, 1998, among the Company and the Purchasers named therein, pursuant
to which the Company has issued its $140,000,000 7.055% Senior Notes, Series
A, due May 30, 2003, its $30,000,000 7.168% Senior Notes, Series B, due May
30, 2005, and its $10,000,000 9.530% Senior Notes, Series C, due May 30, 2005,
and any replacement or renewal thereof, (ii) the Note Agreement dated as of
May 1, 1999 among the Company and the Purchasers named therein, pursuant to
which the Company has issued its $112,000,000 7.39% Senior Notes, Series A due
May 1, 2004 and $25,000,000 7.49% Senior Notes, Series B due May 1, 2006 and
any replacement or renewal thereof, (iii) the Note Agreement dated as of
November 15, 1999 among the Company and the Purchasers named therein, pursuant
to which the Company has issued its $102,000,000 8.51% Senior Notes due
November 15, 2004 and (iv) the Note Agreement dated as of August 31, 2000
between the Company and Intrepid Funding Master Trust, a Delaware statutory
business trust, pursuant to which the Company has issued its $75,000,000
Auction Rate Reset Senior Notes, Series A, due December 2, 2002.

         "GAAP" shall mean generally accepted accounting principles at the
time in the United States.

         "Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent
or otherwise, by such Person: (i) to purchase such Indebtedness or obligation
or any property or assets constituting security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of such Indebtedness or
obligation, (y) to maintain working capital or other balance sheet condition
or otherwise to advance or make available funds for the purchase or payment of
such Indebtedness or obligation, (iii) to lease property or to purchase
Securities or other property or services primarily for the purpose of assuring
the owner of such Indebtedness or obligation of the ability of the primary
obligor to make payment of the Indebtedness or obligation, or (iv) otherwise
to assure the owner of the Indebtedness or obligation of the primary obligor
against loss in respect thereof. For the purposes of all computations made
under this Agreement, a Guaranty in respect of any Indebtedness for borrowed
money shall be deemed to be Indebtedness equal to the principal amount of such
Indebtedness for borrowed money which has been guaranteed, and a Guaranty in
respect of any other obligation or liability or any dividend shall be deemed
to be Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend.

                                     -23-

<PAGE>   27

         "Holder" shall mean any Person which is, at the time of reference,
the registered Holder of any Note.

         "Indebtedness" with respect to any Person means, at any time, without
         duplication,

                   (a)  its liabilities for borrowed money and its redemption
         obligations in respect of mandatorily redeemable preferred stock;

                   (b)  its liabilities for the deferred purchase price of
         property acquired by such Person (excluding accounts payable arising
         in the ordinary course of business but including all liabilities
         created or arising under any conditional sale or other title
         retention agreement with respect to any such property);

                   (c)  all liabilities appearing on its balance sheet in
         accordance with GAAP in respect of Capitalized Leases;

                   (d)  all liabilities for borrowed money secured by any Lien
         with respect to any property owned by such Person (whether or not it
         has assumed or otherwise become liable for such liabilities);

                   (e)  all its liabilities in respect of unreimbursed
         drawings under letters of credit or instruments serving a similar
         function issued or accepted for its account by banks and other
         financial institutions (whether or not representing obligations for
         borrowed money);

                   (f)  Interest Rate Swaps of such Person; and

                   (g)  any Guaranty of such Person with respect to
         liabilities of a type described in any of clauses (a) through (f)
         hereof.

         Indebtedness of any Person shall include all obligations of such
Person of the character described in clauses (a) through (g) to the extent
such Person remains legally liable in respect thereof notwithstanding that any
such obligation is deemed to be extinguished under GAAP.

         "Institutional Holder" shall mean any insurance company, bank,
savings and loan association, trust company, investment company, charitable
foundation, employee benefit plan (as defined in ERISA) or other institutional
investor or financial institution which is not principally engaged, or as one
of its important activities, in the business of making small business
investments of the type made by the Company.

         "Intercreditor Agreement" means an intercreditor agreement pursuant
to which the Banks, the Holders of the Existing Notes and the Holders of the
Notes have agreed to share payments made by any Consolidated Subsidiary under
a Subsidiary Existing Note Guaranty, a Subsidiary Note Guaranty or a
Subsidiary Bank Guaranty on an equal and ratable basis.

         "Interest Expense" means, with respect to a Person and for any
period, the total consolidated interest expense (including, without
limitation, capitalized interest expense and

                                     -24-

<PAGE>   28

interest expense attributable to Capitalized Leases) of such Person and in any
event shall include all interest expense with respect to any Debt in respect
of which such Person is wholly or partially liable.

         "Interest Period" shall mean, initially, the period commencing on the
Closing Date and ending on January 15, 2001, and, thereafter, each three-month
period commencing on the last day of the prior Interest Period and ending on
the numerically corresponding day of the third month following the month in
which such Interest Period commences, provided that:

                   (a)  if any Interest Period would otherwise end on a day
         which is not a Business Day, that Interest Period shall be extended
         to the next succeeding Business Day unless the result of such
         extension would be to carry such Interest Period into another
         calendar month in which event such Interest Period shall end on the
         immediately preceding Business Day;

                   (b)  no Interest Period shall extend beyond the final
         maturity of the Series B Notes; and

                   (c)  the interest rate applicable to such Interest Period
         shall accrue from and including the first day of such Interest Period
         to, but excluding, the last day thereof.

         For purposes of determining an Interest Period other than initial
Interest Period, each three-month period shall start on a day in a calendar
month and end on a numerically corresponding day in the third calendar month
following thereafter, provided that if an Interest Period begins on the last
day of a calendar month and/or if there is no numerically corresponding day in
such third calendar month in which an Interest Period is to end, then such
Interest Period shall end on the last Business Day of such third calendar
month.

         "Interest Rate Swap" means a currency swap, an interest rate swap or
other currency or interest rate hedge entered into by the Company or a
Consolidated Subsidiary. For the purposes of this Agreement, the amount of the
obligation under any Interest Rate Swap shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter
of such Person, based on the assumption that such Interest Rate Swap had
terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Interest Rate Swap provides
for the netting of amounts payable by and to such Person thereunder or if any
such agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligation shall be the net
amount so determined.

         "Investment Company Act" shall mean the Investment Company Act of
1940, as amended, and all rules and regulations promulgated thereunder.

         "Investments" shall mean all investments, in cash or by delivery of
property made, directly or indirectly in any Person, whether by acquisition of
shares of capital stock, Indebtedness or other obligations or Securities or by
loan, advance, capital contribution or otherwise.

                                     -25-

<PAGE>   29

         "LIBOR" means, for each Interest Period, (a) the LIBOR Index Rate for
such Interest Period, if such rate is available, and (b) if the LIBOR Index
Rate cannot be determined, with respect to any Interest Period, an interest
rate per annum equal to the London Interbank Offered Rate for such Interest
Period, as published or announced two (2) Business Days prior to the
commencement of such Interest Period in the Money Rates Section of The Wall
Street Journal (Eastern Edition), or (if the London Interbank Offered Rate for
such Interest Period is not so published or announced at such time)
interpolated from publications or announcements in The Wall Street Journal
(Eastern Edition) for the London Interbank Offered Rates for the periods of
time closest to such Interest Period or, in the event that The Wall Street
Journal (Eastern Edition) ceases for any reason to publish or announce such
rate of interest, any other source selected by the holders of a majority in
principal amount of the Series B Notes. "LIBOR Index Rate" means, for any
Interest Period, the rate per annum (rounded upwards, if necessary, to the
next higher one hundred-thousandth of a percentage point) for deposits in U.S.
Dollars for a period equal to such Interest Period which appears on the
Bloomberg Financial Markets Service Page BBAM-1 (or if such page is not
available, the Reuters Screen LIBO Page) as of 11:00 a.m. (London, England
time) on the date 2 Business Days before the commencement of such Interest
Period. "Reuters Screen LIBO Page" means the display designated as the "LIBO"
page on the Reuters Monitory Money Rates Service (or such other page as may
replace the LIBO page on that service or such other service as may be
nominated by the British Bankers' Association as the information vendor for
the purpose of displaying British Banker's Association Interest Settlement
Rates for U.S. Dollar deposits).

         "Lien" shall mean any interest in property securing an obligation
owed to, or a claim by, a Person other than the owner of the property, whether
such interest is based on the common law, statute or contract, and including
but not limited to the security interest lien arising from a mortgage,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances (including,
with respect to stock, stockholder agreements, voting trust agreements,
buy-back agreements and all similar arrangements) affecting property. For the
purposes of this Agreement, the Company or any Consolidated Subsidiary shall
be deemed to be the owner of any property which it has acquired or holds
subject to a conditional sale agreement, Capitalized Lease or other
arrangement pursuant to which title to the property has been retained by or
vested in some other Person for security purposes and such retention or
vesting shall constitute a Lien.

          "Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of
the Company and its Consolidated Subsidiaries taken as a whole, or (b) the
ability of the Company to perform its obligations under this Agreement and the
Notes, or (c) the validity or enforceability of this Agreement or the Notes.

          "Material Subsidiary" shall mean any Consolidated Subsidiary which
has total assets having a value (determined in accordance with the market
valuation method pursuant to GAAP) greater than or equal to $40,000,000.

                                     -26-

<PAGE>   30

         "Memorandum" is described in paragraph 5 of Exhibit B hereto.

         "Mortgage Repurchase Facility" means financing agreements providing
for (i) the pledge and assignment of Commercial Mortgage Loans owned by the
Company and its Consolidated Subsidiaries as security for loans to the Company
and its Consolidated Subsidiaries, or (ii) the sale of such Commercial
Mortgage Loans to a commercial lender pursuant to an agreement under which
such loans shall be repurchased by the Company or a Consolidated Subsidiary at
a future date.

         "Multiemployer Plan" shall have the same meaning as in ERISA.

         "Net Proceeds" means, with respect to an Equity Issuance by a Person,
the aggregate amount of all cash received by such Person in respect of such
Equity Issuance net of investment banking fees, legal fees, accountants fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred by such Person in connection with such Equity Issuance.

         "Non-Recourse Indebtedness" means Indebtedness secured by Real Estate
Assets if recourse for the payment of such Indebtedness is limited to such
Real Estate Assets.

         "PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

         "Permitted Preferred Stock" means (i) preferred stock that is issued
from time to time by a Subsidiary to the SBA having an aggregate stated value
not exceeding $7,000,000 at any one time outstanding or (ii) preferred stock
that is issued from time to time by a Subsidiary for the purpose of qualifying
such Subsidiary as a real estate investment trust under Sections 856 through
860 of the Code and having an aggregate stated value not exceeding $500,000 at
any one time outstanding, provided that in any event Permitted Preferred Stock
shall not include any Voting Stock.

         "Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, and a government
or agency or political subdivision thereof.

         "Plan" means a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.

         "Priority Debt" means the sum of (i) all Debt of the Company and its
Consolidated Subsidiaries secured by a Lien, and (ii) all unsecured Debt of
Consolidated Subsidiaries (excluding in each case, Debt owing to the Company
or another Consolidated Subsidiary).

         "Purchaser" shall have the meaning set forth in SECTION 1.1.

         "QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.

                                     -27-

<PAGE>   31

         "Real Estate" means fee ownership or co-ownership of, or leaseholds
of, land or improvements thereon.

         "Real Estate Assets" means (i) Real Estate securing Investments made
in the ordinary course of business, (ii) Commercial Mortgage Loans and (iii)
Related Collateral.

         "Related Collateral" means, in respect of any Commercial Mortgage
Loan: (i) any and all documents, instruments, agreements, records or other
collateral of any kind evidencing, securing, guaranteeing or otherwise
relating to such Commercial Mortgage Loan, including without limitation all
promissory notes or other negotiable instruments, mortgages, deeds of trust or
similar instruments, assignments of leases or rents or other collateral
assignments, financing statements, guaranties, indemnities, servicing
agreements, servicing records, files, surveys, certificates, affidavits, title
abstracts, title insurance policies and commitments, correspondence, opinions,
appraisals, closing documents, computer programs, computer storage media, data
bases, accounting records and other books and records relating thereto, (ii)
any and all mortgage guaranties and insurance (issued by governmental agencies
or otherwise) and mortgage insurance certificates or other documents
evidencing such mortgage guaranties or insurance relating to any such
Commercial Mortgage Loan and all claims and payments thereunder, (iii) any and
all other insurance policies and insurance proceeds relating to such
Commercial Mortgage Loan or the related real property, (iv) all "general
intangibles" as defined in the Uniform Commercial Code relating to or
constituting any and all of the foregoing, and (v) any and all replacements,
substitutions or distributions on or proceeds of any and all of the foregoing.

         "Rentals" shall mean and include as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of
the property) payable by the Company or any Consolidated Subsidiary, as lessee
or sublessee under a lease of real or personal property, but shall be
exclusive of any amounts required to be paid by the Company or any
Consolidated Subsidiary (whether or not designated as rents or additional
rents) on account of maintenance, repairs, insurance, taxes and similar
charges. Fixed rents under any so-called "percentage leases" shall be computed
solely on the basis of the minimum rents, if any, required to be paid by the
lessee regardless of sales volume or gross revenues.

         "Reportable Event" shall have the same meaning as in ERISA.

         "SBA" shall mean the United States Small Business Administration.

         "Securities Act" means the Securities Act of 1933, as amended from
time to time or any successor legislation.

         "Security" shall have the same meaning as in Section 2(1) of the
Securities Act.

         "Senior Financial Officer" means the chief financial officer, chief
operating officer, principal accounting officer, treasurer or controller of
the Company.

                                     -28-

<PAGE>   32

         "Senior Funded Debt" means any Debt of the Company which is
classified as long term debt in accordance with GAAP (including, without
limitation, the Bank Credit Agreement) other than Subordinated Debt.

         "Series A Make-Whole Amount" means, with respect to a Series A Note,
an amount equal to the excess, if any, of the Discounted Value of the
Remaining Scheduled Payments with respect to the Called Principal of the
Series A Note over the amount of such Called Principal, provided that the
Series A Make-Whole Amount may in no event be less than zero. For the purposes
of determining the Series A Make-Whole Amount, the following terms have the
following meanings:

                  "Called Principal" means the principal of any Series A Note
         that is to be prepaid pursuant to SECTION 2.2 or has become or is
         declared to be immediately due and payable pursuant to SECTION 6.3,
         as the context requires.

                  "Discounted Value" means, with respect to the Called
         Principal of a Series A Note, the amount obtained by discounting all
         Remaining Scheduled Payments with respect to such Called Principal
         from their respective scheduled due dates to the Settlement Date with
         respect to such Called Principal, in accordance with accepted
         financial practice and at a discount factor (applied on the same
         periodic basis as that on which interest on the Series A Notes is
         payable) equal to the Reinvestment Yield with respect to such Called
         Principal.

                  "Reinvestment Yield" means, with respect to the Called
         Principal of a Series A Note, 0.50% over the yield to maturity
         implied by (i) the yields reported, as of 10:00 A.M. (New York City
         time) on the second Business Day preceding the Settlement Date with
         respect to such Called Principal, on the display designated as "PX-1"
         of the Bloomberg Financial Markets Services Screen (or such other
         display as may replace PX-1 of the Bloomberg Financial Markets
         Services Screen) for actively traded on-the-run U.S. Treasury
         securities having a maturity equal to the Remaining Average Life of
         such Called Principal as of such Settlement Date, or (ii) if such
         yields are not reported as of such time or the yields reported as of
         such time are not ascertainable (including by way of interpolation),
         the Treasury Constant Maturity Series Yields reported, for the latest
         day for which such yields have been so reported as of the second
         Business Day preceding the Settlement Date with respect to such
         Called Principal, in Federal Reserve Statistical Release H.15 (519)
         (or any comparable successor publication) for actively traded
         on-the-run U.S. Treasury securities having a constant maturity equal
         to the Remaining Average Life of such Called Principal as of such
         Settlement Date. Such implied yield will be determined, if necessary,
         by (a) converting U.S. Treasury bill quotations to bond-equivalent
         yields in accordance with accepted financial practice and (b)
         interpolating linearly between (1) the actively traded U.S. Treasury
         security with the maturity closest to and greater than the Remaining
         Average Life and (2) the actively traded on-the-run U.S. Treasury
         security with the maturity closest to and less than the Remaining
         Average Life.

                                     -29-

<PAGE>   33

                  "Remaining Average Life" means, with respect to any Called
         Principal, the number of years (calculated to the nearest one-twelfth
         year) obtained by dividing (i) such Called Principal into (ii) the
         sum of the products obtained by multiplying (a) the principal
         component of each Remaining Scheduled Payment with respect to such
         Called Principal by (b) the number of years (calculated to the
         nearest one-twelfth year) that will elapse between the Settlement
         Date with respect to such Called Principal and the scheduled due date
         of such Remaining Scheduled Payment.

                  "Remaining Scheduled Payments" means, with respect to the
         Called Principal of a Series A Note, all payments of such Called
         Principal and interest thereon that would be due after the Settlement
         Date with respect to such Called Principal if no payment of such
         Called Principal were made prior to its scheduled due date, provided
         that if such Settlement Date is not a date on which interest payments
         are due to be made under the terms of the Series A Notes, then the
         amount of the next succeeding scheduled interest payment will be
         reduced by the amount of interest accrued to such Settlement Date and
         required to be paid on such Settlement Date pursuant to or SECTION
         2.2 or SECTION 6.3.

                  "Settlement Date" means, with respect to the Called
         Principal of a Series A Note, the date on which such Called Principal
         is to be prepaid pursuant to SECTION 2.2 or has become or is declared
         to be immediately due and payable pursuant to SECTION 6.3, as the
         context requires.

         "Series A Notes" shall have the meaning set forth in SECTION 1.1.

         "Series B Notes" shall have the meaning set forth in SECTION 1.1.

         "Series B Overdue Rate" as of any date means the Series B Rate plus
2.0% per annum.

         "Series B Premium Amount" shall mean, in connection with any
prepayment of the Series B Notes pursuant to SECTION 2.1, an amount equal to
the applicable percentage of the principal amount of the Series B Notes or
portion thereof to be prepaid as follows:

<TABLE>
<CAPTION>
                  IF PREPAID DURING THE 12-MONTH PERIOD                        APPLICABLE PREMIUM
                          ENDING OCTOBER 15
                                 <S>                                                <C>
                                 2003                                               2.0%
                                 2004                                               1.0%
                                 2005                                               0.0%
</TABLE>

         "Series B Rate" for each Interest Period shall be a rate per annum
equal to 1.75% plus LIBOR for such Interest Period.

         "Subordinated Debt" means all unsecured Debt of the Company which
shall contain or have applicable thereto subordination provisions providing
for the subordination thereof to other Debt of the Company (including, without
limitation, the obligations of the Company under the Notes).

                                     -30-

<PAGE>   34

         "Subsidiary" with respect to any Person shall mean (i) any
corporation, partnership, association or other business entity at least 50% of
the outstanding shares of Voting Stock or similar interests of which are
owned, directly or indirectly, by such Person (including, without limitation,
any limited partnership in which such Person, directly or indirectly, shall
have at least a 50% vote on matters as to which limited partners may vote),
(ii) any general or limited partnership of which such Person shall be a
general partner or as to which such Person otherwise shall have unlimited
liability, (iii) any general or limited partnership a general partner of which
can be changed or removed by such Person (other than removals that could be
accomplished by voluntary withdrawal of such general partner only), or (iv)
any general or limited partnership in which (x) the amount represented by such
Person's capital account shall be equal to at least 50% of the aggregate
amount represented by the total of all partners' capital accounts or (y) such
Person shall be allocated at least 50% of the profit (or loss) or
distributable cash of the partnership; provided, however, that the term
"Subsidiary", when used in this Agreement without reference to any particular
Person, shall mean a Subsidiary of the Company.

         "Subsidiary Bank Guaranty" means any agreement pursuant to which a
Consolidated Subsidiary has guaranteed the Debt of the Company under the Bank
Credit Agreement.

         "Subsidiary Existing Note Guaranty" means any agreement pursuant to
which a Consolidated Subsidiary has guaranteed the Debt of the Company under
the Existing Notes.

         "Subsidiary Note Guaranty" means any agreement pursuant to which a
Consolidated Subsidiary has guaranteed the Debt of the Company under the
Notes.

         "Voting Stock" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).

         "Wholly-owned" when used in connection with any Subsidiary shall mean
a Subsidiary of which all of the issued and outstanding shares of stock
(except shares required as directors' qualifying shares and Permitted
Preferred Stock) shall be owned by the Company and/or one or more of its
Wholly-owned Subsidiaries.

         Section 8.2.   Accounting Principles. Where the character or amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in
accordance with GAAP, to the extent applicable, except where such principles
are inconsistent with the requirements of this Agreement.

         Section 8.3.   Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action
in question is taken directly or indirectly by such Person.

                                     -31-

<PAGE>   35

SECTION 9.           MISCELLANEOUS.

         Section 9.1.   Registered Notes. The Company shall cause to be kept
at the principal office of the Company a register for the registration and
transfer of the Notes (hereinafter called the "Note Register") and the Company
will register or transfer or cause to be registered or transferred as
hereinafter provided any Note issued pursuant to this Agreement.

         At any time and from time to time the Holder of any Note may transfer
such Note to another Institutional Holder upon surrender thereof at the
principal office of the Company duly endorsed or accompanied by a written
instrument of transfer duly executed by the Holder of such Note or its
attorney duly authorized in writing.

         The Person in whose name any registered Note shall be registered
shall be deemed and treated as the owner and Holder thereof for all purposes
of this Agreement. Payment of or on account of the principal, premium, if any,
and interest on any registered Note shall be made to or upon the written order
of such registered Holder.

         Section 9.2.   Exchange of Notes. At any time and from time to time,
upon not less than ten days' notice to that effect given by the Holder of any
Note initially delivered or of any Note substituted therefor pursuant to
SECTION 9.1, this SECTION 9.2 or SECTION 9.3, and, upon surrender of such Note
at its office, the Company will deliver in exchange therefor, without expense
to such Holder, except as set forth below, a Note for the same aggregate
principal amount as the then unpaid principal amount of the Note so
surrendered, or Notes in the denomination of $500,000 or any amount in excess
thereof as such Holder shall specify, dated as of the date to which interest
has been paid on the Note so surrendered or, if such surrender is prior to the
payment of any interest thereon, then dated as of the date of issue,
registered in the name of such one or more Institutional Holders as may be
designated by such Holder, and otherwise of the same form and tenor as the
Notes so surrendered for exchange. The Company may require the payment of a
sum sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer.

         Section 9.3.   Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
any Note, and in the case of any such loss, theft or destruction upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of the Note, the Company will make and deliver without
expense to the Holder thereof, a new Note, of like tenor, in lieu of such
lost, stolen, destroyed or mutilated Note. If the Purchaser or any subsequent
Institutional Holder is the owner of any such lost, stolen or destroyed Note,
then the affidavit of an authorized officer of such owner, setting forth the
fact of loss, theft or destruction and of its ownership of such Note at the
time of such loss, theft or destruction shall be accepted as satisfactory
evidence thereof and no further indemnity shall be required as a condition to
the execution and delivery of a new Note other than the written agreement of
such owner to indemnify the Company.

        Section 9.4.   Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to
pay directly all of the Purchasers' reasonable out-of-pocket expenses in
connection with the preparation, execution and delivery of

                                     -32-

<PAGE>   36

this Agreement and the transactions contemplated hereby, including but not
limited to the reasonable charges and disbursements of Chapman and Cutler,
special counsel to the Purchasers, duplicating and printing costs and charges
for shipping the Notes, adequately insured to each Purchaser's home office or
at such other place as such Purchaser may designate, the cost of obtaining a
Private Placement Number for the Notes from Standard & Poor's Corporation, and
all such reasonable expenses relating to any amendment, waivers or consents
pursuant to the provisions hereof, including, without limitation, any
amendments, waivers, or consents resulting from any work-out, renegotiation or
restructuring relating to the performance by the Company of its obligations
under this Agreement and the Notes. The Company also agrees that it will pay
and save each Purchaser harmless against any and all liability with respect to
stamp and other taxes, if any, which may be payable or which may be determined
to be payable in connection with the execution and delivery of this Agreement
or the Notes, (other than as specified in the last sentence of SECTION 9.2)
whether or not any Notes are then outstanding. The Company agrees to protect
and indemnify each Purchaser against any liability for any and all brokerage
fees and commissions payable or claimed to be payable to any Person in
connection with the transactions contemplated by this Agreement.

         Section 9.5.   Powers and Rights Not Waived; Remedies Cumulative. No
delay or failure on the part of the Holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof,
or the exercise of any other power or right, and the rights and remedies of
the Holder of any Note are cumulative to, and are not exclusive of, any rights
or remedies any such Holder would otherwise have.

         Section 9.6.   Notices. All communications provided for hereunder
shall be in writing and, if to a Holder, delivered or mailed prepaid by
registered or certified mail or overnight air courier, or by facsimile
communication (with a confirming copy of any such facsimile communication sent
via overnight courier service), in each case addressed to such Holder at its
address appearing on Schedule I to this Agreement or such other address as
such Holder may designate to the Company in writing, and if to the Company
delivered or mailed by registered or certified mail or overnight air courier,
or by facsimile communication, to the Company at 1919 Pennsylvania Avenue,
N.W., 3rd Floor, Washington, D.C. 20006, Attention: Joan M. Sweeney or to such
other address as the Company may in writing designate to the Holders;
provided, however, that a notice to a Holder by overnight air courier shall
only be effective if delivered to such Holder at a street address designated
for such purpose in Schedule I, and a notice to a Holder by facsimile
communication shall only be effective if made by confirmed transmission to
such Holder at a telephone number designated for such purpose in Schedule I,
or, in either case, as such Holder may designate to the Company in writing.

         Section 9.7.   Successors and Assigns. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to the
benefit of each Purchaser and to the benefit of its successors and assigns,
including each successive Holder.

         Section 9.8.   Survival of Covenants and Representations. All
covenants, representations and warranties made by the Company herein and in
any certificates delivered pursuant hereto, whether or not in connection with
the Closing Date, shall survive the closing and the delivery of

                                     -33-

<PAGE>   37

this Agreement and the Notes and shall terminate upon payment in full of all
amounts due under the Notes and this Agreement.

         Section 9.9.   Severability. Should any part of this Agreement for
any reason be declared invalid or unenforceable, such decision shall not
affect the validity or enforceability of any remaining portion, which
remaining portion shall remain in force and effect as if this Agreement had
been executed with the invalid or unenforceable portion thereof eliminated and
it is hereby declared the intention of the parties hereto that they would have
executed the remaining portion of this Agreement without including therein any
such part, parts or portion which may, for any reason, be hereafter declared
invalid or unenforceable.

        Section 9.10.   Governing Law.  This Agreement and the Notes issued
and sold hereunder shall be governed by and construed in accordance with New
York law.

        Section 9.11.   Captions.  The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.

                                     -34-

<PAGE>   38

         The execution hereof by you shall constitute a contract between us
for the uses and purposes hereinabove set forth, and this Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together only one agreement.

                                     ALLIED CAPITAL CORPORATION

                                     By
                                         Name:________________________________

                                         Title:_______________________________

Accepted as of October 15, 2000.
                                     [Variation]

                                     By
                                         Name:________________________________

                                         Title:_______________________________

                                     -35-

<PAGE>   39
                           ALLIED CAPITAL CORPORATION
                           8.54% Senior Note, Series A
                              Due October 15, 2005

No. R-
                                                       ----------------, ------
$

       ALLIED CAPITAL CORPORATION, a Maryland corporation (the "Company"), for
value received, hereby promises to pay to

                              or registered assigns
                      on the fifteenth day of October, 2005
                             the principal amount of

                                                        DOLLARS ($____________)

and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 8.54% per annum from the date hereof until maturity, payable
semiannually on the fifteenth day of each April and October in each year
(commencing on the first of such dates after the date hereof) and at maturity.
The Company agrees to pay interest on overdue principal (including any overdue
required or optional prepayment of principal) and premium, if any, and (to the
extent legally enforceable) on any overdue installment of interest, at the rate
of 10.54% per annum after the due date, whether by acceleration or otherwise,
until paid. Both the principal hereof and interest hereon are payable at the
principal office of the Company in Washington, D.C. in coin or currency of the
United States of America which at the time of payment shall be legal tender for
the payment of public and private debts.

       This Note is one of the 8.54% Senior Notes, Series A due October 15, 2005
(the "Series A Notes") of the Company in the aggregate principal amount of
$115,000,000 issued together with the Floating Rate Senior Notes, Series B due
October 15, 2005 of the Company in the aggregate principal amount of $10,000,000
(the "Series B Notes" and together with the Series A Notes, the "Notes") under
and pursuant to the terms and provisions of the Note Agreement, dated as of
October 15, 2000 (the "Note Agreement"), entered into by the Company with the
Purchasers named therein and this Series A Note and the holder hereof are
entitled with the holders of all other Notes outstanding under the Note
Agreement to all the benefits provided for thereby or referred to therein to the
extent provided in the Note Agreement. Reference is hereby made to the Note
Agreement for a statement of such rights and benefits.

                                  EXHIBIT A-1
                              (to Note Agreement)

<PAGE>   40

       This Series A Note and the other Notes outstanding under the Note
Agreement may be declared due prior to their expressed maturity dates in the
events, on the terms and in the manner and amounts as provided in the Note
Agreement.

       The Series A Notes are not subject to prepayment or redemption at the
option of the Company prior to their expressed maturity dates except on the
terms and conditions and in the amounts and with the premium, if any, set forth
in the Note Agreement.

       This Series A Note is registered on the books of the Company and is
transferable only by surrender thereof at the principal office of the Company
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Series A Note or its attorney duly authorized
in writing. Payment of or on account of principal, premium, if any, and interest
on this Series A Note shall be made only to or upon the order in writing of the
registered holder.

                                                ALLIED CAPITAL CORPORATION

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

                                     A-1-2

<PAGE>   41

                           ALLIED CAPITAL CORPORATION
                       Floating Rate Senior Note, Series B
                              Due October 15, 2005

No. R-
                                                       ----------------, ------
$

       ALLIED CAPITAL CORPORATION, a Maryland corporation (the "Company"), for
value received, hereby promises to pay to

                              or registered assigns
                      on the fifteenth day of October, 2005
                             the principal amount of

                                                      DOLLARS ($____________)

and to pay interest on the principal amount from time to time remaining unpaid
hereon at a floating rate equal to the Series B Rate (as defined in the Note
Agreement hereinafter referred to) from the date hereof until maturity, payable
quarterly on the last day of each Interest Period (as defined in the Note
Agreement hereinafter referred to) in each year (commencing on January 15, 2001)
and at maturity. The Company agrees to pay interest on overdue principal
(including any overdue required or optional prepayment of principal) and
premium, if any, and (to the extent legally enforceable) on any overdue
installment of interest, at the rate equal to the Series B Overdue Rate (as
defined in the Note Agreement hereinafter referred to) after the due date,
whether by acceleration or otherwise, until paid. Both the principal hereof and
interest hereon are payable at the principal office of the Company in
Washington, D.C. in coin or currency of the United States of America which at
the time of payment shall be legal tender for the payment of public and private
debts.

       This Note is one of the Floating Rate Senior Notes, Series B due October
15, 2005 (the "Series B Notes") of the Company in the aggregate principal amount
of $10,000,000 issued together with the 8.54% Senior Notes, Series A due October
15, 2005 of the Company in the aggregate principal amount of $115,000,000 (the
"Series A Notes" and together with the Series B Notes, the "Notes") under and
pursuant to the terms and provisions of the Note Agreement, dated as of October
15, 2000 (the "Note Agreement"), entered into by the Company with the Purchasers
named therein and this Series B Note and the holder hereof are entitled with the
holders of all other Notes outstanding under the Note Agreement to all the
benefits provided for thereby or referred to therein to the extent provided in
the Note Agreement. Reference is hereby made to the Note Agreement for a
statement of such rights and benefits.

                                   EXHIBIT A-2
                               (to Note Agreement)

<PAGE>   42

       This Series B Note and the other Notes outstanding under the Note
Agreement may be declared due prior to their expressed maturity dates in the
events, on the terms and in the manner and amounts as provided in the Note
Agreement.

       The Series B Notes are not subject to prepayment or redemption at the
option of the Company prior to their expressed maturity dates except on the
terms and conditions and in the amounts and with the premium, if any, set forth
in the Note Agreement.

       This Series B Note is registered on the books of the Company and is
transferable only by surrender thereof at the principal office of the Company
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Series B Note or its attorney duly authorized
in writing. Payment of or on account of principal, premium, if any, and interest
on this Series B Note shall be made only to or upon the order in writing of the
registered holder.

                                                 ALLIED CAPITAL CORPORATION

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

                                      A-2-2

<PAGE>   43

                         REPRESENTATIONS AND WARRANTIES

       The Company represents and warrants to each Purchaser as follows:

       1. Subsidiaries. Annex A attached hereto states the name of each of the
Company's Subsidiaries, its jurisdiction of incorporation and the percentage of
its Voting Stock owned by the Company and/or its Subsidiaries. Those
Subsidiaries listed in Section 1 of said Annex A constitute Consolidated
Subsidiaries. The Company and each Subsidiary has good and marketable title to
all of the shares it purports to own of the stock of each Subsidiary, free and
clear in each case of any Lien. All such shares have been duly issued and are
fully paid and non-assessable. The Company is a Business Development Company
under the Investment Company Act.

       2. Corporate Organization and Authority. Except where failure to be
qualified or authorized would not have a Material Adverse Effect, the Company
and each Consolidated Subsidiary,

              (a) is a corporation duly organized, validly existing and in good
       standing under the laws of its jurisdiction of incorporation;

              (b) has all requisite power and authority and all necessary
       licenses and permits to own and operate its properties and to carry on
       its business as now conducted and as presently proposed to be conducted;
       and

              (c) is duly licensed or qualified and is in good standing as a
       foreign corporation in each jurisdiction wherein the nature of the
       business transacted by it or the nature of the property owned or leased
       by it makes such licensing or qualification necessary.

       3. Financial Statements. (a) The consolidated balance sheet at December
31, 1999 and 1998 and the consolidated statements of operations, changes in net
assets and cash flows of the Company for three years ended December 31, 1999,
each accompanied by a report thereon containing an opinion unqualified as to
scope limitations imposed by the Company and otherwise without qualification
except as therein noted, by Arthur Andersen LLP, have been prepared in
accordance with GAAP consistently applied except as therein noted, are correct
and complete and present fairly the financial position of the Company and its
Consolidated Subsidiaries as of such dates and the results of their operations
for such periods. The unaudited consolidated balance sheet of the Company and
its Consolidated Subsidiaries as of June 30, 2000, and the unaudited statements
of operations, changes in net assets and cash flows for the nine month period
ended on said date prepared by the Company have been prepared in accordance with
GAAP consistently applied, are correct and complete and present fairly the
financial position of the Company and its Consolidated Subsidiaries as of such
date and the results of their operations and changes in their financial position
for such period.

       (b) Since December 31, 1999, there has been no change in the condition,
financial or otherwise, of the Company and its Consolidated Subsidiaries as
shown on the consolidated

                                    EXHIBIT B
                               (to Note Agreement)

<PAGE>   44

balance sheet as of such date except changes in the ordinary course of business,
none of which individually or in the aggregate has been materially adverse.

       4. Debt. Annex B attached hereto correctly describes all Debt (including,
without limitation, Debt held by the SBA) and Capitalized Leases of the Company
and its Consolidated Subsidiaries outstanding on September 30, 2000 since which
date there has been no material change in the amounts, interest rates, sinking
funds, installment payments or maturities of the Indebtedness of the Company or
its Consolidated Subsidiaries.

       5. Full Disclosure. The Company, through its agent, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, has delivered to each of the Purchasers a
copy of a Private Placement Memorandum, dated September, 2000 (the
"Memorandum"), relating to the transactions contemplated hereby. The Memorandum
fairly describes, in all material respects, the general nature of the business
and principal properties of the Company and its Consolidated Subsidiaries.
Except as disclosed in this Agreement, the Memorandum, the documents,
certificates or other writings delivered to the Purchasers by or on behalf of
the Company in connection with the transactions contemplated hereby and the
financial statements described in paragraph 3 hereof, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in the Memorandum
or in one of the documents, certificates or other writings identified therein,
or in the financial statements described in paragraph 3 hereof, since December
31, 1999, there has been no change in the financial condition, operations,
business, properties or prospects of the Company or any Consolidated Subsidiary
except changes that individually or in the aggregate could not reasonably be
expected to materially affect adversely the properties, business, prospects,
profits or condition (financial or otherwise) of the Company and its
Consolidated Subsidiaries taken as a whole. There is no fact known to the
Company that could reasonably be expected to materially affect adversely the
properties, business, prospects, profits or condition (financial or otherwise)
of the Company and its Consolidated Subsidiaries that has not been set forth
herein or in the Memorandum or in the other documents, certificates and other
writings delivered to the Purchasers by or on behalf of the Company specifically
for use in connection with the transactions contemplated hereby, except matters
of an economic or regulatory nature generally affecting businesses of the type
engaged in by the Company.

       6. Pending Litigation. There are no actions, suits or proceedings pending
or, to the knowledge of the Company, threatened against or affecting the Company
or any Consolidated Subsidiary in any court or before any governmental authority
or arbitration board or tribunal which involve the possibility of materially and
adversely affecting the properties, business, profits or condition (financial or
otherwise) of the Company and its Consolidated Subsidiaries, taken as a whole.

       7. Title to Properties. The Company and each Consolidated Subsidiary has
good and marketable title in fee simple (or its equivalent under applicable law)
to all material parcels of real property and has good title to all the other
material items of property it purports to own, including that reflected in the
most recent balance sheet referred to in paragraph 3 hereof, except as sold or
otherwise disposed of in the ordinary course of business and except for Liens
permitted

                                      B-2

<PAGE>   45

by the Agreement. The Company and each Consolidated Subsidiary has the
right to, and does, enjoy peaceful and undisturbed possession under all leases
to which it is a party or under which it is a party. All such leases are valid,
subsisting and in full force and effect, none of such leases is in default and
no event has occurred and is continuing, and no condition exists which, after
the passage of time or giving of notice or both could become an event of default
under any such lease.

       8. Patents and Trademarks. The Company and each Consolidated Subsidiary
owns or possesses all the patents, trademarks, trade names, service marks,
copyrights, licenses, permits, registrations, consents (governmental or other)
and rights with respect to the foregoing necessary for the present and planned
future conduct of its business, without any known conflict with the rights of
others.

       9. Sale is Legal and Authorized. The sale of the Notes to the Purchasers,
compliance by the Company with all of the provisions of the Notes and compliance
by the Company with all of the provisions of the Agreement --

              (a) are within the corporate powers of the Company;

              (b) will not violate any provisions of any law or any order of any
       court or governmental authority or agency and will not conflict with or
       result in any breach of any of the terms, conditions or provisions of, or
       constitute a default under the Articles of Incorporation or By-laws of
       the Company or any indenture or other agreement or instrument to which
       the Company is a party or by which it may be bound or result in the
       imposition of any Liens or encumbrances on any property of the Company;
       and

              (c) have been duly authorized by proper corporate action on the
       part of the Company (no action by the stockholders of the Company being
       required by law, by the Articles of Incorporation or By-laws of the
       Company or otherwise), the Agreement and the Notes have been executed and
       delivered by the Company and upon payment of the purchase price of the
       Notes by the Purchaser, the Notes and the Agreement constitute the legal,
       valid and binding obligations, contracts and agreements of the Company
       enforceable in accordance with their terms.

       10. No Defaults. No Default or Event of Default has occurred and is
continuing. The Company is not in default in the payment of principal or
interest on any Debt and is not in default under any instrument or instruments
or agreements under and subject to which any Debt has been issued and no event
has occurred and is continuing under the provisions of any such instrument or
agreement which with the lapse of time or the giving of notice, or both, would
constitute an event of default thereunder.

       11. Governmental Consent. No approval, consent or authorization of, or
registration, filing or declaration with or withholding of objection on the part
of, any regulatory body, state, Federal or local, is necessary in connection
with the execution and delivery by the Company of the Notes and the Agreement or
compliance by the Company with any of the provisions of the Agreement or the
Notes.

                                      B-3

<PAGE>   46

       12. Taxes. All tax returns required to be filed by the Company or any
Consolidated Subsidiary in any jurisdiction have, in fact, been filed, and all
taxes, assessments, fees and other governmental charges upon the Company or any
Consolidated Subsidiary or upon any of their respective properties, income or
franchises, which are shown to be due and payable in such returns have been
paid. For all taxable years ending on or before December 31, 1995, the Federal
income tax liability of the Company has been satisfied and either the period of
limitations on assessment of additional Federal income tax has expired or the
Company has entered into an agreement with the Internal Revenue Service closing
conclusively the total tax liability for the taxable year. The Company does not
know of any proposed additional tax assessment against it for which adequate
provision has not been made on its accounts, and no material controversy in
respect of additional Federal or state income taxes due since said date is
pending or to the knowledge of the Company threatened. The provisions for taxes
on the books of the Company and its Consolidated Subsidiaries are adequate for
all open years, and for its current fiscal period.

       13. Use of Proceeds. The net proceeds from the sale of the Notes will be
used by the Company for general corporate purposes. None of the transactions
contemplated in the Agreement (including, without limitation thereof, the use of
proceeds from the issuance of the Notes) will violate or result in a violation
of Section 7 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any regulation issued pursuant thereto, including, without limitation,
Regulations U, T and X of the Board of Governors of the Federal Reserve System,
12 C.F.R., Chapter II. The Company is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any "margin stock" within the meaning of said Regulation
U. None of the proceeds from the sale of the Notes will be used to purchase, or
refinance any borrowing the proceeds of which were used to purchase, any such
margin stock.

       14. Private Offering. Neither the Company, directly or indirectly, nor
any agent on its behalf has offered or will offer the Notes or has solicited or
will solicit an offer to acquire the Notes from or has otherwise approached or
negotiated or will approach or negotiate in respect of the Notes with any Person
other than such Purchaser and not more than ___ other institutional investors,
each of whom was offered a portion of the Notes at private sale for investment.
Neither the Company, directly or indirectly, nor any agent on its behalf has
offered or will offer the Notes or any similar Security or has solicited or will
solicit an offer to acquire the Notes or any similar Security from any Person so
as to bring the issuance and sale of the Notes within the provisions of Section
5 of the Securities Act. When issued the Notes will not be of the same class as
Securities listed on a national securities exchange registered under Section 6
of the Securities Exchange Act of 1934, as amended, or quoted in a U.S.
automated inter-dealer quotation system, and will not be convertible or
exchangeable into any such Securities.

       15. ERISA. The consummation of the transactions provided for in the
Agreement and compliance by the Company with the provisions thereof and of the
Notes issued thereunder will not involve any non-exempt prohibited transaction
within the meaning of Section 406(a) of ERISA or Sections 4975(c)(1)(A)-(D) of
the Code. Neither the Company nor any ERISA Affiliate has heretofore, is
presently or presently intends to, contribute to, maintain or establish, any
Plan subject to the minimum funding requirements of Section 302 of ERISA or
Section 412

                                      B-4

<PAGE>   47

of the Code. Neither the Company nor any ERISA Affiliate has any contingent
liability with respect to any post-retirement "welfare benefit plan" (as such
term is defined in ERISA) except as has been disclosed to the Purchaser. The
representation by the Company in the first sentence of this paragraph 15 is made
in reliance upon and subject to the accuracy of the representation in SECTION
3.2 as to the sources of the funds used to pay the purchase price of the Notes
to be purchased by each Purchaser.

       16. Compliance with Law. Neither the Company nor any Consolidated
Subsidiary (a) is in violation of any law, ordinance, franchise, governmental
rule or regulation to which it is subject; or (b) has failed to obtain any
license, permit, registration, consent, franchise or other governmental
authorization necessary to the ownership of its property or to the conduct of
its business, which violation or failure to obtain would materially adversely
affect the business, profits, properties or condition (financial or otherwise)
of the Company and its Consolidated Subsidiaries, taken as a whole, or impair
the ability of the Company to perform its obligations contained in the
Agreements or the Notes. Neither the Company nor any Consolidated Subsidiary is
in default with respect to any order of any court or governmental authority or
arbitration board or tribunal.

       17. Compliance with Environmental Laws. The Company is not in violation
of any applicable Federal, state, or local laws, statutes, rules, regulations or
ordinances relating to public health, safety or the environment, including,
without limitation, relating to releases, discharges, emissions or disposals to
air, water, land or ground water, to the withdrawal or use of ground water, to
the use, handling or disposal of polychlorinated biphenyls (PCB's), asbestos or
urea formaldehyde, to the treatment, storage, disposal or management or
hazardous substances (including, without limitation, petroleum, crude oil or any
fraction thereof, or other hydrocarbons), pollutants or contaminants, or to
exposure to toxic, hazardous or other controlled, prohibited or regulated
substances, which violation could have a material adverse effect on the
business, profits, properties or condition (financial or otherwise) of the
Company and its Consolidated Subsidiaries, taken as a whole. The Company does
not know of any liability or class of liability of the Company or any Subsidiary
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended (42 U.S.C. Section 9601 et seq.), or the Resource
Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section 6901 et
seq.).

       18. Foreign Assets Control Regulations, etc. Neither the sale of the
Notes by the Company hereunder nor its use of the proceeds thereof will violate
the Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto.

                                      B-5

<PAGE>   48

                           ALLIED CAPITAL CORPORATION

                           SUBSIDIARIES OF THE COMPANY

1.         CONSOLIDATED SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                               PERCENTAGE OF VOTING
                                                     JURISDICTION OF          STOCK OWNED BY COMPANY
                                                     INCORPORATION            AND EACH OTHER SUBSIDIARY
        NAME OF SUBSIDIARY
<S>                                             <C>                             <C>
Allied Investment Corporation                             Maryland                      100%

Allied Investment Holdings LLC                            Delaware                      100%

Allied Capital SBLC Corporation                           Maryland                      100%

Allied Capital SBLC Holdings LLC                          Delaware                      100%

Allied Capital Holdings LLC                               Delaware                      100%

Allied Capital REIT, Inc.                                 Maryland                      100%

Allied Capital Property LLC                               Delaware                      100%

Allied Capital Equity LLC                                 Delaware                      100%

9586 I-25 East Frontage Road,                             Delaware                      100%
      Longmont, CO 80504 LLC

Allied Capital BeteiligungsBeratung                 Republic of Germany                 100%
      GmbH

</TABLE>

2.      UNCONSOLIDATED SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                                PERCENTAGE OF VOTING
                                                          JURISDICTION OF      STOCK OWNED BY COMPANY
                                                           INCORPORATION      AND EACH OTHER SUBSIDIARY
                   NAME OF SUBSIDIARY
<S>                                                       <C>                 <C>
Allied Capital CMT, Inc.                                      Delaware                  100%

Allied Capital Commercial Mortgage                            Delaware                  100%
   Trust 1998-1
Allied Capital Germany Fund LLC
                                                              Delaware                  100%
Allied Capital Syndication LLC
                                                              Delaware                  100%
Allied Capital Funding LLC
                                                              Delaware                  100%
</TABLE>

                                   ANNEX A
                                (to Exhibit B)

<PAGE>   49

                   DESCRIPTION OF DEBT AND CAPITALIZED LEASES

<TABLE>
<CAPTION>
              DEBT OF COMPANY
             AND CONSOLIDATED
               SUBSIDIARIES                                           OBLIGOR
                                                 BALANCE             COMPANIES               COLLATERAL

<S>                                            <C>                   <C>                     <C>
Revolving line of credit                       $185,000,000             ACC                  None

Master loan and security agreement                    0                 ACC                  Commercial Mortgage
                                                  ---------                                     Loans

Unsecured long-term notes                       419,000,000             ACC                  None

Auction Rate Reset Senior Note                   75,000,000             ACC                  None

OPIC loan                                         5,700,000             ACC                  None

</TABLE>

<TABLE>
<CAPTION>

         DEBT OF
      CONSOLIDATED
      SUBSIDIARIES

<S>                              <C>               <C>                    <C>
SBA debentures                   $77,450,000            AIC               None

Mortgage loan                     2,498,.375       Allied Capital          Office Building
                                                    Equity LLC

                                 764,648,375
                                 ===========
</TABLE>

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

ACC        --        the Company
AIC        --        Allied Investment Corporation

<PAGE>   50

                DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION

       The closing opinion of Chapman and Cutler, special counsel to the
Purchasers, called for by SECTION 4.1 of the Agreement, shall be dated the
Closing Date and addressed to the Purchasers, shall be satisfactory in form and
substance to the Purchasers and shall be to the effect that:

              1. The Company is a corporation, validly existing and in good
       standing under the laws of the State of Maryland and has the corporate
       power and the corporate authority to execute and deliver the Agreement;
       and the Company has the corporate power and the corporate authority to
       issue the Notes.

              2. The Agreement has been duly authorized by all necessary
       corporate action on the part of the Company, has been duly executed and
       delivered by the Company and constitutes the legal, valid and binding
       obligation of the Company enforceable in accordance with its terms,
       subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
       affecting creditors' rights generally, and general principles of equity
       (regardless of whether the application of such principles is considered
       in a proceeding in equity or at law).

              3. The Notes have been duly authorized by all necessary corporate
       action on the part of the Company, have been duly executed and delivered
       by the Company and constitute the legal, valid and binding obligations of
       the Company enforceable in accordance with their terms, subject to
       bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
       creditors' rights generally, and general principles of equity (regardless
       of whether the application of such principles is considered in a
       proceeding in equity or at law).

              4. The issuance, sale and delivery of the Notes under the
       circumstances contemplated by the Agreement do not, under existing law,
       require the registration of the Notes under the Securities Act of 1933,
       as amended, or the qualification of an indenture under the Trust
       Indenture Act of 1939, as amended.

       The opinion of Chapman and Cutler shall also state that the opinion of
Sutherland Asbill & Brennan, LLP is satisfactory in scope and form to Chapman
and Cutler and that, in their opinion, the Purchaser is justified in relying
thereon.

       In rendering the opinion set forth in paragraph 1 above, Chapman and
Cutler may rely solely upon an examination of the Articles of Incorporation
certified by, and a certificate of good standing of the Company from, the
Secretary of State of the State of Maryland and the By-laws of the Company.

       With respect to matters of fact upon which such opinion is based, Chapman
and Cutler may rely on appropriate certificates of public officials and officers
of the Company.

                                    EXHIBIT C
                               (to Note Agreement)

<PAGE>   51

                         DESCRIPTION OF CLOSING OPINION
                           OF COUNSEL FOR THE COMPANY

       The closing opinion of Sutherland Asbill & Brennan, LLP, counsel for the
Company, which is called for by SECTION 4.1 of the Agreement, shall be dated the
Closing Date and addressed to the Purchasers purchasing Notes on the Closing
Date, shall be satisfactory in scope and form to the Purchasers and shall be to
the effect that:

              1. The Company is a corporation, duly incorporated, validly
       existing and in good standing under the laws of the State of Maryland and
       has the full corporate power and the corporate authority to conduct the
       activities in which it is now engaged.

              2. The Company has the corporate power and the corporate authority
       to execute and perform the Agreement and to issue the Notes.

              3. The Agreement has been duly authorized by all necessary
       corporate action on the part of the Company, has been duly executed and
       delivered by the Company and constitutes the legal, valid and binding
       obligation of the Company enforceable in accordance with its terms,
       subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
       affecting creditors' rights generally, and general principles of equity
       (regardless of whether the application of such principles is considered
       in a proceeding in equity or at law).

              4. The Notes have been duly authorized by all necessary corporate
       action on the part of the Company, have been duly executed and delivered
       by the Company and constitute the legal, valid and binding obligations of
       the Company enforceable in accordance with their terms, subject to
       bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
       creditors' rights generally, and general principles of equity (regardless
       of whether the application of such principles is considered in a
       proceeding in equity or at law).

              5. No other approval, consent or withholding of objection on the
       part of, or filing, registration or qualification with, any governmental
       body, Federal or state, is necessary in connection with the execution and
       delivery of the Agreement or the Notes.

              6. The issuance and sale of the Notes and the execution, delivery
       and performance by the Company of the Agreement do not conflict with or
       result in any breach of any of the provisions of or constitute a default
       under or result in the creation or imposition of any Lien upon any of the
       property of the Company pursuant to the provisions of the Articles of
       Incorporation or By-laws of the Company or any agreement or other
       instrument known to such counsel to which the Company is a party or by
       which the Company may be bound.

              7. The issuance, sale and delivery of the Notes under the
       circumstances contemplated by the Agreement do not, under existing law,
       require the registration of the

                                    EXHIBIT D
                               (to Note Agreement)

                                       4
<PAGE>   52

       Notes under the Securities Act of 1933, as amended, or the qualification
       of an indenture under the Trust Indenture Act of 1939, as amended.

       In rendering the opinion set forth in paragraph 1 above, Sutherland
Asbill & Brennan, LLP may rely solely upon an examination of the Charter of the
Company certified by, and a certificate of good standing of the Company from,
the State Department of Assessments and Taxation of the State of Maryland and
the By-laws of the Company.

       The opinion of Sutherland Asbill & Brennan, LLP shall cover such other
matters relating to the sale of the Notes as the Purchaser may reasonably
request. With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Company.

                                      D-2
<PAGE>   53
       The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be executed
in any number of counterparts, each executed counterpart constituting an
original but all together only one agreement.

                                          ALLIED CAPITAL CORPORATION

                                          By /s/ Kelly A. Anderson
                                              Its:  EVP & Treasurer

Accepted as of October 15, 2000.

                                          JOHN HANCOCK LIFE INSURANCE COMPANY

                                          By /s/ Anthony J. Della Piana
                                              Its:  Managing Director

                                          JOHN HANCOCK VARIABLE LIFE INSURANCE
                                            COMPANY

                                          By /s/ Anthony J. Della Piana
                                              Its:  Authorized Signatory

                                          INVESTORS PARTNER LIFE INSURANCE
                                            COMPANY

                                          By /s/ Anthony J. Della Piana
                                              Its:  Authorized Signatory

                                          MELLON BANK, N.A., solely in its
                                            capacity as Trustee for the
                                            Long-Term Investment Trust
                                            (as directed by John Hancock Life
                                            Insurance Company), and not in its
                                            individual capacity

                                          By /s/ Bernadette Rist
                                              Its:  Authorized Signatory

<PAGE>   54

                                          SUN LIFE ASSURANCE COMPANY OF CANADA

                                          By /s/ John N. Whelihan
                                             Its:   Vice President, U.S. Private
                                                    Placements-for President

                                          By /s/ Richard Gordon
                                             Its:   Vice President, U.S. Public
                                                    Bonds - for Secretary

                                          SUN LIFE ASSURANCE COMPANY OF CANADA
                                            (U.S.)

                                          By /s/ John N. Whelihan
                                             Its:   Vice President, U.S. Private
                                                    Placements-for President

                                          By /s/ Richard Gordon
                                             Its:   Vice President, U.S. Public
                                                    Bonds - for Secretary

                                          SUN LIFE INSURANCE AND ANNUITY COMPANY
                                            OF NEW YORK

                                          By /s/ John N. Whelihan
                                             Its:   Vice President, U.S. Private
                                                    Placements-for President

                                          By /s/ Richard Gordon
                                             Its:   Vice President, U.S. Public
                                                    Bonds - for Secretary

                                          THE GUARDIAN LIFE INSURANCE COMPANY
                                               OF AMERICA

                                          By /s/ Brian Keating
                                             Its:  Director - Fixed Income

<PAGE>   55

                                          TEACHERS INSURANCE AND ANNUITY
                                          ASSOCIATION OF AMERICA

                                          By /s/ Loren S. Archibald
                                              Its:  Managing Director - Private
                                                    Placements

                                          TIAA-CREF LIFE INSURANCE COMPANY

                                          By /s/ Loren S. Archibald
                                              Its:  Managing Director - Private
                                                    Placements

                                          NATIONWIDE LIFE INSURANCE COMPANY

                                          By /s/ Mark W. Poeppelman
                                              Its:  Associate Vice President

                                          MINNESOTA LIFE INSURANCE COMPANY

                                          By:  Advantus Capital Management, Inc.

                                               By /s/ Steven S. Nelson
                                                   Its:  Vice President

                                          AMERICAN FIDELITY ASSURANCE COMPANY

                                          By:  Advantus Capital Management, Inc.

                                               By  /s/ Thomas A. Gunderson
                                                    Its:  Vice President

                                          GREAT WESTERN INSURANCE COMPANY

                                          By:  Advantus Capital Management, Inc.

                                               By /s/ Allen Steinkopf
                                                   Its:  Vice President
<PAGE>   56
                                          NATIONAL TRAVELERS LIFE COMPANY

                                          By:   Advantus Capital Management,
                                                Inc.

                                                By /s/ Marilyn Froelich
                                                    Its:  Vice President

                                          AMERICAN REPUBLIC INSURANCE COMPANY

                                          By:   Advantus Capital Management,
                                                Inc.

                                                By /s/ Rose A. Lambros
                                                    Its:  Vice President

                                          ALLSTATE LIFE INSURANCE COMPANY

                                          By /s/ David Walsh

                                          By /s/ Daniel C. Leimbach
                                             Authorized Signatories

                                          PACIFIC LIFE INSURANCE COMPANY

                                          By /s/ Cathy L. Schwartz
                                             Its:  Assistant Vice President

                                          By /s/ Audrey L. Milfs
                                             Its:  Corporate Secretary

                                          THE OHIO NATIONAL LIFE INSURANCE
                                            COMPANY

                                          By /s/ Michael A. Boedeker
                                             Its:  Vice President, Senior
                                                   Investment Officer

<PAGE>   57

                                          U.S. BRANCH OF CLARICA LIFE INSURANCE
                                            COMPANY

                                          By /s/ Constance L. Keller
                                             Its:  Executive Director, Private
                                                   Placements

                                          By /s/ Michael J. Steppe
                                             Its:  Senior Vice President

                                          GE EDISON LIFE INSURANCE COMPANY

                                          By /s/ William R. Wright
                                             Its:  Chief Investment Officer

                                          GE LIFE AND ANNUITY ASSURANCE COMPANY

                                          By /s/ Jon Lucia
                                             Its: Assistant Vice President and
                                                  Investment Officer<PAGE>

  ============================================================================

                              AMENDED AND RESTATED

                                 TRUST AGREEMENT

                                     between

                          MMCA AUTO RECEIVABLES TRUST,

                                  as Depositor,

                                       and

                            WILMINGTON TRUST COMPANY,

                                as Owner Trustee

                         Dated as of November [ ], 2000

 ============================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                         Page
                                                                                                         ----
<S>                 <C>                                                                                 <C>

                                    ARTICLE I
                                   DEFINITIONS

  SECTION 1.1       Capitalized Terms......................................................................1
  SECTION 1.2       Other Definitional Provisions..........................................................4

                            ARTICLE II
                     ORGANIZATION OF THE TRUST

  SECTION 2.1       Name...................................................................................6
  SECTION 2.2       Office.................................................................................6
  SECTION 2.3       Purposes and Powers....................................................................6
  SECTION 2.4       Appointment of Owner Trustee. .........................................................7
  SECTION 2.5       Initial Capital Contribution of Owner Trust Estate.....................................7
  SECTION 2.6       Declaration of Trust...................................................................7
  SECTION 2.7       Title to Trust Property................................................................8
  SECTION 2.8       Situs of Trust.........................................................................8
  SECTION 2.9       Representations and Warranties of the Depositor........................................8
  SECTION 2.10      Federal Income Tax Matters.............................................................9

                                   ARTICLE III
                  TRUST CERTIFICATES AND TRANSFER OF INTERESTS

  SECTION 3.1       Initial Ownership.....................................................................10
  SECTION 3.2       The Certificates......................................................................10
  SECTION 3.3       Authentication of Certificates........................................................11
  SECTION 3.4       Registration of Certificates; Transfer and Exchange of Certificates...................11
  SECTION 3.5       Mutilated, Destroyed, Lost or Stolen Certificates.....................................17
  SECTION 3.6       Persons Deemed Owners of Certificate..................................................17
  SECTION 3.7       Access to List of Certificateholders' Names and Addresses.............................18
  SECTION 3.8       Maintenance of Office or Agency.......................................................18
  SECTION 3.9       Appointment of Paying Agent...........................................................18

                                 i

<PAGE>

                                                                                                         Page
                                                                                                         ----
<S>                 <C>                                                                                  <C>

                                   ARTICLE IV
                            ACTIONS BY OWNER TRUSTEE

  SECTION 4.1       Prior Notice to Certificateholders with Respect to
                             Certain Matters..............................................................19
  SECTION 4.2       Action by Certificateholders with Respect to Certain Matters..........................20
  SECTION 4.3       Action by Certificateholders with Respect to Bankruptcy...............................20
  SECTION 4.4       Restrictions on Certificateholders' Power.............................................20
  SECTION 4.5       Majority Control......................................................................21

                                    ARTICLE V
                   APPLICATION OF TRUST FUNDS; CERTAIN DUTIES

  SECTION 5.1       Establishment of Certificate Distribution Account. ...................................21
  SECTION 5.2       Application of Trust Funds............................................................21
  SECTION 5.3       Method of Payment.....................................................................22
  SECTION 5.4       No Segregation of Monies; No Interest.................................................22
  SECTION 5.5       Accounting and Reports to the Certificateholders,
                             the Internal Revenue Service and Others......................................22
  SECTION 5.6       Signature on Returns; Tax Matters Partner.............................................23

                                   ARTICLE VI
                      AUTHORITY AND DUTIES OF OWNER TRUSTEE

  SECTION 6.1       General Authority.....................................................................23
  SECTION 6.2       General Duties........................................................................24
  SECTION 6.3       Action upon Instruction...............................................................24
  SECTION 6.4       No Duties Except as Specified in this Agreement or
                             in Instructions..............................................................25
  SECTION 6.5       No Action Except Under Specified Documents or Instructions............................26
  SECTION 6.6       Restrictions..........................................................................26

                                       ii

<PAGE>

                                                                                                         Page
                                                                                                         ----
<S>                 <C>                                                                                  <C>

                                   ARTICLE VII
                           REGARDING THE OWNER TRUSTEE

  SECTION 7.1       Acceptance of Trusts and Duties.......................................................26
  SECTION 7.2       Furnishing of Documents...............................................................28
  SECTION 7.3       Representations and Warranties........................................................28
  SECTION 7.4       Reliance; Advice of Counsel...........................................................28
  SECTION 7.5       Not Acting in Individual Capacity.....................................................29
  SECTION 7.6       Owner Trustee Not Liable for Certificates or Receivables..............................29
  SECTION 7.7       Owner Trustee May Own Certificates and Notes..........................................30

                           ARTICLE VIII
                   COMPENSATION OF OWNER TRUSTEE

  SECTION 8.1       Owner Trustee's Fees and Expenses.....................................................30
  SECTION 8.2       Indemnification.......................................................................30
  SECTION 8.3       Payments to the Owner Trustee.........................................................31

                            ARTICLE IX
                            TERMINATION

  SECTION 9.1       Termination of Trust Agreement........................................................31
  SECTION 9.2       Prepayment of the Certificates........................................................32

                             ARTICLE X
      SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES

  SECTION 10.1      Eligibility Requirements for Owner Trustee............................................33
  SECTION 10.2      Resignation or Removal of Owner Trustee...............................................34
  SECTION 10.3      Successor Owner Trustee...............................................................34
  SECTION 10.4      Merger or Consolidation of Owner Trustee..............................................35
  SECTION 10.5      Appointment of Co-Trustee or Separate Trustee.........................................35

                                iii

<PAGE>

                                                                                                        Page
                                                                                                        ----
<S>                   <C>                                                                              <C>

                                   ARTICLE XI
                                  MISCELLANEOUS

   SECTION 11.1      Supplements and Amendments..........................................................37
   SECTION 11.2      No Legal Title to Owner Trust Estate in Certificateholders..........................39
   SECTION 11.3      Limitation on Rights of Others......................................................39
   SECTION 11.4      Notices.............................................................................39
   SECTION 11.5      Severability........................................................................39
   SECTION 11.6      Separate Counterparts...............................................................39
   SECTION 11.7      Successors and Assigns..............................................................40
   SECTION 11.8      Covenants of the Depositor..........................................................40
   SECTION 11.9      No Petition; Subordination; Claims Against Depositor................................40
   SECTION 11.10     No Recourse.........................................................................41
   SECTION 11.11     Headings............................................................................41
   SECTION 11.12     Governing Law.......................................................................41

</TABLE>

                                    EXHIBITS

EXHIBIT A        Form of Certificate
EXHIBIT B        Form of Certificate of Trust
EXHIBIT C        Form of Rule 144A Transferor Certificate
EXHIBIT D        Form of Investment Letter -- Qualified Institutional Buyer
EXHIBIT E        Form of Investment Letter -- Institutional Accredited Investor

                                       iv

<PAGE>

                  AMENDED AND RESTATED TRUST AGREEMENT, dated as of November
[       ], 2000 (as the same may be further amended, supplemented or otherwise
modified and in effect from time to time, this "Agreement"), between MMCA AUTO
RECEIVABLES TRUST, a Delaware business trust, as depositor (the "Depositor"),
having its principal executive office at 6363 Katella Avenue, Cypress,
California 90630-5205; and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as trustee under this agreement (in such capacity, together with
any successor or permitted assign, the "Owner Trustee"), having its principal
corporate trust office at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001.

                  WHEREAS, the parties hereto intend to amend and restate that
certain Trust Agreement, dated as of November [ ], 2000 between the Depositor
and the Owner Trustee, on the terms and conditions hereinafter set forth;

                  NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Depositor and the
Owner Trustee hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.1 Capitalized Terms. For all purposes of this
Agreement, the following terms shall have the meanings set forth below:

                  "Agreement" shall have the meaning specified in the recitals
hereto.

                  "Basic Documents" shall mean this Agreement, the Certificate
of Trust, the Indenture, the Assignments (as defined in the Purchase Agreement),
the Sale and Servicing Agreement, the Purchase Agreement, the Administration
Agreement, the Note Depository Agreement, the Yield Supplement Agreement, the
Control Agreement and other documents and certificates delivered in connection
therewith as the same may from time to time be amended, supplemented or
otherwise modified and in effect.

                  "Business Trust Statute" shall mean Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code ss. 3801 et seq., as the same may be amended,
supplemented or otherwise modified and in effect from time to time.

                  "Certificate" shall mean a physical certificate evidencing the
beneficial interest of a Certificateholder in the property of the Trust,
substantially in the form of Exhibit A attached hereto. Such certificate shall
entitle the Holder thereof to distributions pursuant to this Agree-

<PAGE>

ment from collections and other proceeds in respect of the Owner Trust Estate;
provided, however, that the Owner Trust Estate has been pledged to the Indenture
Trustee to secure payment of the Notes and that the rights of Certificateholders
to receive distributions on the Certificates are subordinated to the rights of
the Noteholders as described in the Sale and Servicing Agreement and the
Indenture.

                  "Certificate Distribution Account" shall have the meaning
assigned to such term in Section 5.1.

                  "Certificate of Trust" shall mean the Certificate of Trust in
the form of Exhibit B filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.

                  "Certificate Register" and "Certificate Registrar" shall mean
the register mentioned and the registrar appointed pursuant to Section 3.4.

                  "Certificateholder" shall mean a Holder of a Certificate.

                  "Code" shall mean the Internal Revenue Code of 1986, as
amended, and Treasury Regulations promulgated thereunder.

                  "Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001;
or at such other address as the Owner Trustee may designate by notice to the
Certificateholders and the Depositor, or the principal corporate trust office of
any successor Owner Trustee (the address of which the successor Owner Trustee
will notify the Certificateholders and the Depositor).

                  "Depositor" shall mean MMCA Auto Receivables Trust, a Delaware
business trust.

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

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

                  "Expenses" shall have the meaning assigned to such term in
Section 8.2.

                  "Holder" shall mean a Person in whose name a Certificate is
registered in the Certificate Register.

                  "Indemnified Parties" shall have the meaning assigned to such
term in Section 8.2.

                                        2

<PAGE>

                  "Indenture" shall mean the Indenture, dated as of November
[ ], 2000, between the Trust and Bank of Tokyo - Mitsubishi Trust Company, a New
York banking corporation, as indenture trustee, as the same may be amended,
supplemented or otherwise modified and in effect from time to time.

                  "Initial Certificate Balance" shall mean $[     ].

                  "MART Trust Agreement" shall mean the Amended and Restated
Trust Agreement, dated as of October 1, 1999, between MMCA, as beneficiary, and
Chase Manhattan Bank USA, N.A. (formerly known as Chase Manhattan Bank
Delaware), a Delaware banking corporation, as trustee, relating to the
Depositor, as from time to time amended, supplemented or otherwise modified and
in effect.

                  "MMCA" shall mean Mitsubishi Motors Credit of America, Inc., a
Delaware corporation, and its successors and assigns.

                  "Owner Trust Estate" shall mean all right, title and interest
of the Trust in, to and under the property and rights assigned to the Trust
pursuant to Article II of the Sale and Servicing Agreement.

                  "Owner Trustee" shall mean Wilmington Trust Company, a
Delaware banking corporation, not in its individual capacity but solely as owner
trustee under this Agreement, and any successor Owner Trustee hereunder.

                  "Paying Agent" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.9 and shall initially be Wilmington Trust
Company.

                  "Prepayment Date" shall mean the Payment Date specified by the
Servicer pursuant to Section 9.2(a).

                  "Prepayment Price" shall mean an amount equal to the
Certificate Balance as of the applicable Prepayment Date.

                  "Qualified Institutional Buyer" has the meaning specified in
Rule 144A.

                  "Record Date" shall mean, with respect to any Payment Date for
any Certificate, the fifteenth (15th) day of the preceding month, unless such
fifteenth (15th) day is not a Business Day, in which case the immediately
preceding Business Day.

                  "Rule 144A" shall have the meaning assigned to such term in
Section 3.4(d)(i).

                                        3

<PAGE>

                  "Rule 144A Information" shall have the meaning assigned to
such term in Section 3.4(e).

                  "Sale and Servicing Agreement" shall mean the Sale and
Servicing Agreement, dated as of November [ ], 2000 and among the Trust, the
Depositor, as seller, and MMCA, as servicer, as the same may be amended,
supplemented or otherwise modified and in effect from time to time.

                  "Secretary of State" shall mean the Secretary of State of the
State of Delaware.

                  "Securities Act" shall mean the Securities Act of 1933, as
amended.

                  "Transfer" shall have the meaning assigned to such term in
Section 3.2.

                  "Treasury Regulations" shall mean regulations, including
proposed or temporary regulations, promulgated under the Code. References herein
to specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.

                  "Trust" shall mean the trust established by this Agreement.

                  "Void Transfer" shall have the meaning assigned to such term
in Section 3.2.

                  SECTION 1.2    Other Definitional Provisions.

                  (a) Capitalized terms used herein and not otherwise defined
have the meanings assigned to them in the Sale and Servicing Agreement or, if
not defined therein, in the Indenture or in the MART Trust Agreement.

                  (b) All terms in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.

                  (c) As used in this Agreement and in any certificate or other
documents made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.

                                      4

<PAGE>

                  (d) The words "hereof", "herein", "hereunder", and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation".

                  (e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.

                  (f) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.

                                       5

<PAGE>

                                   ARTICLE II

                            ORGANIZATION OF THE TRUST

                  SECTION 2.1 Name. The Trust created hereby shall be known as
"MMCA Auto Owner Trust 2000-2", in which name the Owner Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.

                  SECTION 2.2 Office. The office of the Trust shall be in care
of the Owner Trustee at the Corporate Trust Office or at such other address in
the State of Delaware as the Owner Trustee may designate by written notice to
the Certificateholders and the Depositor.

                  SECTION 2.3 Purposes and Powers. (a) The purpose of the Trust
is, and the Trust shall have the power and authority, to engage solely in the
following activities:

                           (i) to issue the Notes pursuant to the Indenture, and
         the Certificates pursuant to this Agreement, and to sell the Notes upon
         the written order of the Depositor;

                           (ii) with the proceeds of the sale of the Notes to
         fund the Reserve Account, the Pre-Funding and Reinvestment Account, the
         Negative Carry Account and the Yield Supplement Account, to pay the
         organizational, start-up and transactional expenses of the Trust, and
         to pay the balance to the Depositor pursuant to the Sale and Servicing
         Agreement;

                           (iii) to pay interest on and principal of the Notes
         and distributions on the Certificates;

                           (iv) to assign, grant, transfer, pledge, mortgage and
         convey the Owner Trust Estate (other than the Certificate Distribution
         Account and the proceeds thereof) to the Indenture Trustee pursuant to
         the Indenture;

                           (v) to enter into and perform its obligations under
         the Basic Documents to which it is to be a party;

                           (vi) to engage in those activities, including
         entering into agreements, that are necessary, suitable or convenient to
         accomplish the foregoing or are incidental thereto or connected
         therewith; and

                                       6

<PAGE>

                           (vii) subject to compliance with the Basic Documents,
         to engage in such other activities as may be required in connection
         with conservation of the Owner Trust Estate and the making of
         distributions to the Noteholders and the Certificateholders.

The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the other
Basic Documents.

                  SECTION 2.4 Appointment of Owner Trustee. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein and in the
Business Trust Statute.

                  SECTION 2.5 Initial Capital Contribution of Owner Trust
Estate. As of November [ ], 2000, the Depositor sold, assigned, transferred,
conveyed and set over to the Owner Trustee the sum of $1. The Owner Trustee
hereby acknowledges receipt in trust from the Depositor, as of such date, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Certificate Distribution Account. The Depositor
shall pay organizational expenses of the Trust as they may arise or shall, upon
the request of the Owner Trustee, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee.

                  SECTION 2.6 Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate in trust upon and subject to
the conditions set forth herein for the use and benefit of the
Certificateholders, subject to the obligations of the Trust under the Basic
Documents. It is the intention of the parties hereto that (i) the Trust
constitute a business trust under the Business Trust Statute and that this
Agreement constitute the governing instrument of such business trust and (ii)
solely for income and franchise tax purposes, the Trust shall be treated (a) if
it has a single beneficial owner, as a non-entity and (b) if it has more than
one beneficial owner, as a partnership, with the assets of the partnership being
the Receivables and other assets held by the Trust, the partners of the
partnership being the Certificateholders and the Notes constituting indebtedness
of the partnership. The parties agree that, unless otherwise required by the
appropriate tax authorities, the Trust will file or cause to be filed annual or
other necessary returns, reports and other forms consistent with the
characterization of the Trust either as a nonentity or as a partnership for such
tax purposes. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and in the Business Trust Statute
with respect to accomplishing the purposes of the Trust. The Owner Trustee has
filed the Certificate of Trust with the Secretary of State.

                  SECTION 2.7 Title to Trust Property. Legal title to the
entirety of the Owner Trust Estate shall be vested at all times in the Trust as
a separate legal entity, except where

                                       7

<PAGE>

applicable law in any jurisdiction requires title to any part of the Owner Trust
Estate to be vested in a trustee or trustees, in which case title shall be
deemed to be vested in the Owner Trustee, a co-trustee and/or a separate
trustee, as the case may be.

                  SECTION 2.8 Situs of Trust. The Trust shall be located and
administered in the State of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State of Delaware or the
State of New York. The Trust shall not have any employees in any state other
than the State of Delaware; provided, however, that nothing herein shall
restrict or prohibit the Owner Trustee from having employees within or without
the State of Delaware. Payments will be received by the Trust only in Delaware
or New York, and payments will be made by the Trust only from Delaware or New
York. The only office of the Trust will be at the Corporate Trust Office in the
State of Delaware.

                  SECTION 2.9 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Owner Trustee that:

                  (a) The Depositor is duly organized and validly existing as a
business trust in good standing under the laws of the State of Delaware, with
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.

                  (b) The Depositor is duly qualified to do business as a
foreign business trust in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business shall require such qualifications.

                  (c) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms, and the Depositor has full
power and authority to sell and assign the property to be sold and assigned to,
and deposited with, the Trust, and the Depositor has duly authorized such sale
and assignment and deposit to the Trust by all necessary corporate action; and
the execution, delivery and performance of this Agreement has been duly
authorized by the Depositor by all necessary corporate action.

                  (d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, the Certificate of
Trust or amended and restated trust agreement of the Depositor, or any
indenture, agreement or other instrument to which the Depositor is a party or by
which it is bound; nor result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement or
other instrument (other than pursuant to the Basic Documents); nor violate any
law or, to the best of the Depositor's knowledge, any order, rule or regulation
applicable to the Depositor of any court or of any Federal or state regulatory
body,

                                       8

<PAGE>

administrative agency or other governmental instrumentality having jurisdiction
over the Depositor or its properties.

                  (e) There are no proceedings or investigations pending or, to
the Depositor's best knowledge, threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Depositor or its properties: (i) asserting the invalidity of this
Agreement, the Indenture, any of the other Basic Documents, the Notes or the
Certificates, (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, the Indenture or any of the other Basic Documents, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement or (iv) which might adversely affect the
Federal income tax attributes or Applicable Tax State franchise or income tax
attributes, of the Notes.

                  (f) The representations and warranties of the Depositor in
Section 3.1 of the Purchase Agreement are true and correct.

                  SECTION 2.10 Federal Income Tax Matters. The
Certificateholders acknowledge that it is their intent and that they understand
it is the intent of the Depositor and the Servicer that, for purposes of Federal
income, state and local income and franchise tax and any other income taxes, the
Trust will be treated either as a "nonentity" under Treas. Reg. ss. 301.7701-3
or as a partnership, and the Certificateholders (including the Depositor) will
be treated as partners in that partnership. The Depositor and the other
Certificateholders by acceptance of a Certificate agree to such treatment and
agree to take no action inconsistent with such treatment. For each taxable year
(or portion thereof), other than periods in which there is only one
Certificateholder:

                  (a) amounts paid to the Depositor pursuant to Sections 4.1(b),
4.7(a), 4.7(b) and 4.9 of the Sale and Servicing Agreement or clause (i) of the
fourth paragraph of Section 5.1(a) of the Sale and Servicing Agreement for such
year (or other period) shall be treated as a guaranteed payment within the
meaning of Section 707(c) of the Code; and

                  (b) all remaining net income or net loss, as the case may be,
of the Trust for such year (or other period) as determined for Federal income
tax purposes (and each item of income, gain, credit, loss or deduction entering
into the computation thereof) shall be allocated to the Certificateholders pro
rata in accordance with the outstanding principal balances of their respective
Certificates.

The Depositor is authorized to modify the allocations in this paragraph if
necessary or appropriate, in its sole discretion, for the allocations to fairly
reflect the economic income, gain or loss to the Depositor or the
Certificateholders or as otherwise required by the Code.

                                       9

<PAGE>

                                   ARTICLE III

                  TRUST CERTIFICATES AND TRANSFER OF INTERESTS

                  SECTION 3.1 Initial Ownership. Upon the formation of the Trust
by the contribution by the Depositor pursuant to Section 2.5 and until the
issuance of the Certificates, the Depositor shall be the sole beneficiary of the
Trust.

                  SECTION 3.2 The Certificates. The Certificates shall be issued
in one or more registered, definitive, physical certificates, in substantially
the form set forth in Exhibit A, in minimum denominations of at least $1,000,000
and multiples of $1,000 in excess thereof; provided, however, that a single
Certificate may be issued in a denomination equal to the Initial Certificate
Balance less the aggregate denominations of all other Certificates or a
denomination less than $1,000. No Certificate may be sold, transferred,
assigned, participated, pledged, or otherwise disposed of (any such act, a
"Transfer") to any Person except in accordance with the provisions of Section
3.4, and any attempted Transfer in violation of this Section or Section 3.4
shall be null and void (each, a "Void Transfer"). Notwithstanding the foregoing,
following the delivery to the Owner Trustee of an Opinion of Counsel to the
effect that the elimination of restrictions on transfer will not cause the Trust
to be taxable as a corporation for Federal income tax purposes or for purposes
of the tax laws of any Applicable Tax State, this Agreement may be amended to
modify or delete transfer restrictions in accordance with such Opinion of
Counsel.

                  The Certificates may be in printed or typewritten form and
shall be executed on behalf of the Trust by manual or facsimile signature of a
Responsible Officer of the Owner Trustee. Certificates bearing the manual or
facsimile signatures of individuals who were, at the time when such signatures
shall have been affixed, authorized to sign on behalf of the Trust, shall be
validly issued and entitled to the benefits of this Agreement, notwithstanding
that such individuals or any of them shall have ceased to be so authorized prior
to the authentication and delivery of such Certificates or did not hold such
offices at the date of authentication and delivery of such Certificates.

                  If Transfer of the Certificates is permitted pursuant to this
Section 3.2 and Section 3.4, a transferee of a Certificate shall become a
Certificateholder, and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder upon such transferee's acceptance
of a Certificate duly registered in such transferee's name pursuant to Section
3.4.

                  SECTION 3.3 Authentication of Certificates. Concurrently with
the initial sale of the Receivables to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause the Certificates, in an
aggregate principal amount equal to the Initial Certificate Balance, to be
executed on behalf of the Trust, authenticated and delivered to or upon

                                       10

<PAGE>

the written order of the Depositor, signed by its chief executive officer, chief
financial officer or chief accounting officer, without further corporate action
by the Depositor, in authorized denominations. No Certificate shall entitle its
Holder to any benefit under this Agreement, or shall be valid for any purpose,
unless there shall appear on such Certificate a certificate of authentication
substantially in the form set forth in Exhibit A attached hereto executed by the
Owner Trustee or Wilmington Trust Company, as the Owner Trustee's authenticating
agent, by manual signature; such authentication shall constitute conclusive
evidence that such Certificate shall have been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.

                  SECTION 3.4 Registration of Certificates; Transfer and
Exchange of Certificates. (a) The Certificate Registrar shall keep or cause to
be kept, at the office or agency maintained pursuant to Section 3.8, a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trust shall provide for the registration of Certificates and of
Transfers and exchanges of Certificates as herein provided. Wilmington Trust
Company shall be the initial Certificate Registrar. No Transfer of a Certificate
shall be recognized except upon registration of such Transfer in the Certificate
Register.

                  (b) No Certificateholder shall Transfer any Certificate
initially held by it unless such transfer is made pursuant to an effective
registration statement or otherwise in accordance with the requirements under
the Securities Act and effective registration or qualification under applicable
state securities laws, or is made in a transaction which does not require such
registration or qualification. If a transfer is to be made in reliance upon an
exemption from the Securities Act, and under the applicable state securities
laws, (i) the Certificate Registrar shall require an Opinion of Counsel
reasonably satisfactory to the Certificate Registrar and the Depositor that such
transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from the Securities Act, applicable state
securities laws and other relevant laws, which Opinion of Counsel shall not be
an expense of the Certificate Registrar, the Depositor or the Trustee, and (ii)
the Certificate Registrar shall require the transferee to execute a
certification acceptable to and in form and substance satisfactory to the
Certificate Registrar setting forth the facts surrounding such transfer.

                  (c) No Transfer of any Certificate shall be permitted,
recognized or recorded unless the Depositor has consented in writing to such
Transfer, which consent may be withheld in the sole discretion of the Depositor,
provided, however, that no such consent of the Depositor shall be required where
the proposed transferee is, and at the time of the Transfer will be, a
Certificateholder. Each Certificate shall bear a legend to the following effect
unless determined otherwise by the Administrator (as certified to the
Certificate Registrar in an Officer's Certificate) consistent with applicable
law:

                                       11

<PAGE>

                  "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER
ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE OF THE UNITED STATES. THE
HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES FOR THE BENEFIT OF THE
TRUST AND THE DEPOSITOR THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED ONLY IN A DENOMINATION OF AT LEAST $1,000,000, ONLY IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS, AND ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE
MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER,
RESALE, PLEDGE, OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
SUBJECT TO (A) THE RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF A
CERTIFICATE SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT C TO THE TRUST
AGREEMENT AND (B) THE RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF A
LETTER SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT D TO THE TRUST AGREEMENT,
(2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), SUBJECT TO THE RECEIPT BY THE TRUST, AND THE
CERTIFICATE REGISTRAR OF SUCH EVIDENCE ACCEPTABLE TO THE TRUST THAT SUCH
REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE TRUST AGREEMENT
AND THE SECURITIES ACT AND OTHER APPLICABLE LAWS, (3) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO ANY OTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO (A) THE
RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF A LETTER SUBSTANTIALLY IN
THE FORM ATTACHED AS EXHIBIT E TO THE TRUST AGREEMENT OR (B) THE RECEIPT BY THE
TRUST AND THE CERTIFICATE REGISTRAR OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE
TRUST THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
TRUST AGREEMENT AND THE SECURITIES ACT AND OTHER APPLICABLE LAWS, OR (4) TO THE
DEPOSITOR OR ITS AFFILIATES, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE UNITED STATES AND SECURITIES AND BLUE SKY LAWS OF THE
STATES OF THE UNITED STATES. IN ADDITION, EXCEPT IN THE CASE OF TRANSFERS TO
EXISTING CERTIFICATEHOLDERS, THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED ONLY WITH THE EXPRESS WRITTEN CONSENT OF THE DEPOSITOR
(WHICH CONSENT MAY BE WITHHELD FOR ANY REASON OR FOR NO REASON)."

                                       12

<PAGE>

                  As a condition to the registration of any Transfer of a
Certificate, the prospective transferee of such a Certificate shall represent to
the Owner Trustee and the Certificate Registrar the following:

                           (i) It has neither acquired nor will it Transfer any
         Certificate it purchases (or any interest therein) or cause any such
         Certificates (or any interest therein) to be marketed on or through an
         "established securities market" within the meaning of section
         7704(b)(1) of the Code, including, without limitation, an
         over-the-counter-market or an interdealer quotation system that
         regularly disseminates firm buy or sell quotations.

                           (ii) It either (A) is not, and will not become, a
         partnership, Subchapter S corporation, or grantor trust for U.S.
         Federal income tax purposes, or (B) is such an entity, but none of the
         direct or indirect beneficial owners of any of the interests in such
         transferee have allowed or caused, or will allow or cause, 80% or more
         (or such other percentage as the Depositor may establish prior to the
         time of such proposed Transfer) of the value of such interests to be
         attributable to such transferee's ownership of Certificates.

                           (iii) It understands that no subsequent Transfer of
         the Certificates is permitted unless (A) such Transfer is of a
         Certificate with a denomination of at least $1,000,000 and (B) the
         Depositor consents in writing (which consent may be withheld for any
         reason or for no reason) to the proposed Transfer; provided, however,
         that no such consent shall be required where the proposed transferee
         is, and at the time of the Transfer will be, a Holder of a Certificate.

                           (iv) It understands that the opinion of tax counsel
         that the Trust is not a publicly traded partnership taxable as a
         corporation is dependent in part on the accuracy of the representations
         in paragraphs (i), (ii) and (iii) above.

                           (v) If it is acquiring any Certificates as a
         fiduciary or agent for one or more investor accounts, it has sole
         investment discretion with respect to each such account and it has full
         power to make the acknowledgments, representations and agreements
         contained herein on behalf of each such account.

                           (vi) It is not (A) an employee benefit plan, as
         defined in Section 3(3) of ERISA, that is subject to Title I of ERISA,
         (B) a plan described in Section 4975(e)(1) of the Code, (C) a
         governmental plan, as defined in Section 3(32) of ERISA, subject to any
         Federal, state or local law which is, to a material extent, similar to
         the provisions of Section 406 of ERISA or Section 4975 of the Code, (D)
         an entity whose underlying assets include plan assets by reason of a
         plan's

                                       13

<PAGE>

         investment in the entity (within the meaning of Department of Labor
         Regulation 29 C.F.R. ss. 2510.3-101) or (E) a person investing "plan
         assets" of any such plan (excluding, for purposes of this clause (E),
         any entity registered under the Investment Company Act of 1940, as
         amended).

                           (vii) It is a Person who is either (A) (1) a citizen
         or resident of the United States, (2) a corporation, partnership or
         other entity organized in or under the laws of the United States or any
         political subdivision thereof or (3) a Person not described in (1) or
         (2) whose ownership of the Certificates is effectively connected with
         such Person's conduct of a trade or business within the United States
         (within the meaning of the Code) and who provides the Depositor and the
         Owner Trustee an IRS Form 4224 (and such other certifications,
         representations or opinions of counsel as may be requested by the
         Depositor or the Owner Trustee) or (B) an estate or trust the income of
         which is includible in gross income for United States Federal income
         tax purposes, regardless of source.

                           (viii)It understands that any purported Transfer of
         any Certificate (or any interest therein) in contravention of any of
         the restrictions and conditions (including any violation of the
         representation in paragraph (ii) above by an investor who continues to
         hold such Certificates occurring any time after the Transfer in which
         it acquired such Certificates) in this Section 3.4 shall be a Void
         Transfer, and the purported transferee in a Void Transfer shall not be
         recognized by the Trust or any other Person as a Certificateholder for
         any purpose.

                           (ix) It agrees that if it determines to Transfer any
         of the Certificates it will cause its proposed transferee to provide to
         the Trust and the Certificate Registrar a letter substantially in the
         form of Exhibit D or E hereof, as applicable, or such other written
         statement as the Depositor shall prescribe.

                  (d) By acceptance of any Certificate, the Certificateholder
thereof specifically agrees with and represents to the Depositor, the
Certificate Registrar and the Trust that no Transfer of such Certificate shall
be made unless the registration requirements of the Securities Act and any
applicable state securities laws are complied with, or such Transfer is exempt
from the registration requirements under the Securities Act because the Transfer
satisfies one of the following:

                           (i) such Transfer is in compliance with Rule 144A
         under the Securities Act ("Rule 144A"), to a transferee who the
         transferor reasonably believes is a Qualified Institutional Buyer that
         is purchasing for its own account or for the account of a Qualified
         Institutional Buyer and to whom notice is given that such transfer is
         being made in reliance upon Rule 144A under the Securities Act

                                       14

<PAGE>

         and (x) the transferor executes and delivers to the Trust and the
         Certificate Registrar a Rule 144A transferor certificate substantially
         in the form attached as Exhibit C and (y) the transferee executes and
         delivers to the Trust and the Certificate Registrar an investment
         letter substantially in the form attached as Exhibit D;

                           (ii) after the appropriate holding period, such
         Transfer is pursuant to an exemption from registration under the
         Securities Act provided by Rule 144 under the Securities Act and the
         transferee, if requested by the Trust or the Certificate Registrar,
         delivers an Opinion of Counsel in form and substance satisfactory to
         the Trust and the Depositor; or

                           (iii) such Transfer is to an institutional accredited
         investor as defined in rule 501(a)(1), (2), (3) or (7) of Regulation D
         promulgated under the Securities Act in a transaction exempt from the
         registration requirements of the Securities Act, such Transfer is in
         accordance with any applicable securities laws of any state of the
         United States or any other jurisdiction, and such investor executes and
         delivers to the Trust and the Certificate Registrar an investment
         letter substantially in the form attached as Exhibit E.

                  (e) The Trust shall make available to the prospective
transferor and transferee information requested to satisfy the requirements of
paragraph (d)(4) of Rule 144A (the "Rule 144A Information"). The Rule 144A
Information shall include any or all of the following items requested by the
prospective transferee:

                           (i) each statement delivered to Certificateholders
         pursuant to Section 4.11 of the Sale and Servicing Agreement on each
         Payment Date preceding such request; and

                           (ii) such other information as is reasonably
         available to the Owner Trustee in order to comply with requests for
         information pursuant to Rule 144A under the Securities Act.

                  None of the Depositor, the Certificate Registrar or the Trust
is under an obligation to register any Certificate under the Securities Act or
any other securities law.

                  (f) Upon surrender for registration of Transfer of any
Certificate at the office or agency maintained pursuant to Section 3.8 and upon
compliance with any provisions of this Agreement relating to such Transfer, the
Owner Trustee shall execute, authenticate and deliver (or shall cause Wilmington
Trust Company, as its authenticating agent, to authenticate and deliver), in the
name of the designated transferee or transferees, one or more new Certificates
in

                                       15

<PAGE>

authorized denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent.

                  Subject to Sections 3.4(b) and 3.4(c), at the option of a
Certificateholder, Certificates may be exchanged for other Certificates of
authorized denominations of a like aggregate amount upon surrender of the
Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.8.

                  Every Certificate presented or surrendered for registration of
Transfer or exchange shall be accompanied by a written instrument of transfer
and accompanied by IRS Form 4224 or W-9 in form satisfactory to the Owner
Trustee and the Certificate Registrar, duly executed by the Certificateholder or
his attorney duly authorized in writing. Each Certificate surrendered for
registration of Transfer or exchange shall be cancelled and subsequently
disposed of by the Certificate Registrar in accordance with its customary
practice.

                  No service charge shall be made for any registration of
Transfer or exchange of Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any Transfer or
exchange of Certificates.

                  (g) The provisions of this Section 3.4 and of this Agreement
generally are intended to prevent the Trust from being characterized as a
"publicly traded partnership" within the meaning of Section 7704 of the Code, in
reliance on Treas. Reg. ss.ss. 1.7704-1(e) and (h), and the Depositor shall take
such intent into account in determining whether or not to consent to any
proposed Transfer of any Certificate.

                  The preceding provisions of this Section 3.4 notwithstanding,
the Owner Trustee shall not make and the Certificate Registrar shall not
register any Transfer or exchange of Certificates for a period of fifteen (15)
days preceding the due date for any payment with respect to the Certificates.

                  Notwithstanding anything contained herein to the contrary, the
Owner Trustee shall not be responsible for ascertaining whether any transfer
complies with the registration provisions or exemptions from the Securities Act,
the Exchange Act, applicable state securities law or the Investment Company Act
of 1940, as amended; provided, however, that if a certification is specifically
required to be delivered to the Owner Trustee by a purchaser or transferee of a
Certificate, the Owner Trustee shall be under a duty to examine the same to
determine whether it conforms to the requirements of this Trust Agreement and to
register transfers only upon receipt of documents and certifications specified
herein and shall promptly notify the party delivering the same if such
certification does not so conform.

                                       16

<PAGE>

                  SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (b) there
shall be delivered to the Certificate Registrar and the Owner Trustee such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, the Owner Trustee on behalf of the Trust shall execute
and the Owner Trustee, or Wilmington Trust Company, as the Owner Trustee's
authenticating agent, shall authenticate and deliver, in exchange for, or in
lieu of, any such mutilated, destroyed, lost or stolen Certificate, as the case
may be, a new Certificate of like tenor and denomination. In connection with the
issuance of any new Certificate under this Section 3.5, the Owner Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section 3.5 shall constitute
conclusive evidence of ownership in the Trust, as if originally issued, whether
or not the lost, stolen or destroyed Certificate shall be found at any time.

                  SECTION 3.6 Persons Deemed Owners of Certificates. Prior to
due presentation of a Certificate for registration of transfer, the Owner
Trustee, the Certificate Registrar and any Paying Agent may treat the Person in
whose name any Certificate shall be registered in the Certificate Register as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 5.2 and for all other purposes whatsoever, and none of the
Owner Trustee, the Certificate Registrar or any Paying Agent shall be bound by
any notice to the contrary.

                  SECTION 3.7 Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Servicer and the Depositor, or to the Indenture Trustee, within fifteen (15)
days after receipt by the Owner Trustee of a written request therefor from the
Servicer, the Depositor, or the Indenture Trustee, as the case may be, a list,
in such form as the requesting party may reasonably require, of the names and
addresses of the Certificateholders as of the most recent Record Date. If three
or more Certificateholders or one or more Holders of Certificates evidencing not
less than 25% of the Certificate Balance apply in writing to the Owner Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner Trustee
shall, within five (5) Business Days after the receipt of such application,
afford such applicants access during normal business hours to the current list
of Certificateholders. Each Certificateholder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Depositor,
the Certificate Registrar or the Owner Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.

                                       17

<PAGE>

                  SECTION 3.8 Maintenance of Office or Agency. The Owner Trustee
shall maintain in Wilmington, Delaware, an office or offices or agency or
agencies where Certificates may be surrendered for registration of Transfer or
exchange and where notices and demands to or upon the Owner Trustee in respect
of the Certificates and the Basic Documents may be served. The Owner Trustee
shall give prompt written notice to the Depositor and to the Certificateholders
of any change in the location of the Certificate Registrar or any such office or
agency.

         SECTION 3.9 Appointment of Paying Agent. The Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.2 and shall report the amounts of such distributions to
the Owner Trustee. Any Paying Agent shall have the revocable power to withdraw
funds from the Certificate Distribution Account for the purpose of making the
distributions referred to above. The Owner Trustee may revoke such power and
remove the Paying Agent if the Owner Trustee determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent shall initially be
Wilmington Trust Company, and any co-paying agent chosen by the Owner Trustee.
Wilmington Trust Company shall be permitted to resign as Paying Agent upon
thirty (30) days' written notice to the Owner Trustee. In the event that
Wilmington Trust Company shall no longer be the Paying Agent, the Owner Trustee
shall appoint a successor to act as Paying Agent (which shall be a bank or trust
company). The Owner Trustee shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Owner Trustee to execute and deliver to
the Owner Trustee an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Owner Trustee that as Paying Agent,
such successor Paying Agent or additional Paying Agent will hold all sums, if
any, held by it for payment to the Certificateholders in trust for the benefit
of the Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. The Paying Agent shall return all unclaimed funds to the
Owner Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Owner Trustee. The provisions of
Sections 7.1, 7.3, 7.4 and 8.1 shall apply to the Owner Trustee also in its role
as Paying Agent, for so long as the Owner Trustee shall act as Paying Agent and,
to the extent applicable, to any other paying agent appointed hereunder. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.

                                   ARTICLE IV

                            ACTIONS BY OWNER TRUSTEE

                  SECTION 4.1 Prior Notice to Certificateholders with Respect to
Certain Matters. With respect to the following matters, the Owner Trustee shall
not take action unless, (i) at least thirty (30) days before the taking of such
action, the Owner Trustee shall have notified the Certificateholders and the
Rating Agencies in writing of the proposed action and (ii)

                                       18

<PAGE>

Certificateholders holding not less than a majority of the aggregate Certificate
Balance shall not have notified the Owner Trustee in writing prior to the 30th
day after such notice is given that such Certificateholders have withheld
consent or provided alternative direction:

                  (a) the initiation of any claim or lawsuit by the Trust
(except claims or lawsuits brought by the Servicer in connection with the
collection of the Receivables) and the settlement of any action, claim or
lawsuit brought by or against the Trust (except with respect to the
aforementioned claims or lawsuits for collection by the Servicer of the
Receivables);

                  (b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute);

                  (c) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is required;

                  (d) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interests of the Certificateholders;

                  (e) the amendment, change or modification of the Sale and
Servicing Agreement or the Administration Agreement, except to cure any
ambiguity or to amend or supplement any provision in a manner or add any
provision that would not materially adversely affect the interests of the
Certificateholders; or

                  (f) the appointment pursuant to the Indenture of a successor
Note Registrar, Paying Agent for the Notes or Indenture Trustee or pursuant to
this Agreement of a successor Certificate Registrar, or the consent to the
assignment by the Note Registrar, Paying Agent for the Notes or Indenture
Trustee or Certificate Registrar of its obligations under the Indenture or this
Agreement, as applicable.

                  SECTION 4.2 Action by Certificateholders with Respect to
Certain Matters. The Owner Trustee may not, except upon the occurrence of an
Event of Servicing Termination subsequent to the payment in full of the Notes
and in accordance with the written direction of Certificateholders holding not
less than a majority of the aggregate Certificate Balance, (a) remove the
Servicer under the Sale and Servicing Agreement pursuant to Article VIII
thereof, (b) appoint a successor Servicer pursuant to Article VIII of the Sale
and Servicing Agreement, (c) remove the Administrator under the Administration
Agreement pursuant to Section 8 thereof, (d) appoint a successor Administrator
pursuant to Section 8 of the Administration Agreement or (e) sell the
Receivables after the termination of the Indenture, except as expressly provided
in the Basic Documents.

                                       19

<PAGE>

                  SECTION 4.3 Action by Certificateholders with Respect to
Bankruptcy. The Owner Trustee shall not have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust unless the Notes have been paid
in full and each Certificateholder approves of such commencement in advance and
delivers to the Owner Trustee a certificate certifying that such
Certificateholder reasonably believes that the Trust is insolvent.

                  SECTION 4.4 Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the other Basic
Documents or would be contrary to Section 2.3, nor shall the Owner Trustee be
obligated to follow any such direction, if given.

                  SECTION 4.5 Majority Control. Except as expressly provided
herein, any action that may be taken by the Certificateholders under this
Agreement may be taken by the Holders of Certificates evidencing not less than a
majority of the Certificate Balance. Except as expressly provided herein, any
written notice of the Certificateholders delivered pursuant to this Agreement
shall be effective if signed by Holders of Certificates evidencing not less than
a majority of the Certificate Balance at the time of the delivery of such
notice.

                                    ARTICLE V

                   APPLICATION OF TRUST FUNDS; CERTAIN DUTIES

                  SECTION 5.1 Establishment of Certificate Distribution Account.
Pursuant to Section 4.1(e) of the Sale and Servicing Agreement, there has been
established and there shall be maintained a segregated trust account in the name
of the Owner Trustee at which shall be designated as the "Certificate
Distribution Account." The Certificate Distribution Account shall be held in
trust in the name of the Owner Trustee for the benefit of the
Certificateholders. Except as expressly provided in Section 3.9, the Certificate
Distribution Account shall be under the sole dominion and control of the Owner
Trustee. All monies deposited from time to time in the Certificate Distribution
Account pursuant to the Sale and Servicing Agreement or the Indenture shall be
applied as provided in this Agreement and the Sale and Servicing Agreement or
the Indenture.

                  SECTION 5.2 Application of Trust Funds.

                  (a) On each Payment Date, the Owner Trustee (if other than the
Paying Agent) shall, based on the information contained in the Servicer's
Certificate delivered on the relevant Determination Date pursuant to Section 3.9
of the Sale and Servicing Agreement, transfer the amount deposited in the
Certificate Distribution Account pursuant to Section 2.8(a) of the Indenture on
such Payment Date to the Paying Agent, or the Paying Agent, based upon such

                                       20

<PAGE>

information, shall withdraw from the Certificate Distribution Account, for
distribution to the Certificateholders pro rata based on the outstanding
principal balance of the Certificates funds available therein.

                  (b) On each Payment Date, the Owner Trustee shall, or shall
cause the Paying Agent to, send to each Certificateholder the statement provided
to the Owner Trustee by the Servicer pursuant to Section 4.11 of the Sale and
Servicing Agreement with respect to such Payment Date.

                  (c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Certificateholder, such tax
shall reduce the amount otherwise distributable to the Certificateholder in
accordance with this Section 5.2. The Owner Trustee and each Paying Agent is
hereby authorized and directed to retain from amounts otherwise distributable to
the Certificateholders sufficient funds for the payment of any such withholding
tax that is legally owed by the Trust (but such authorization shall not prevent
the Owner Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The amount of any withholding tax imposed with respect to a
Certificateholder shall be treated as cash distributed to such Certificateholder
at the time it is withheld by the Trust and remitted to the appropriate taxing
authority. If there is a possibility that withholding tax is payable with
respect to a distribution (such as a distribution to a non-U.S.
Certificateholder ), the Owner Trustee may, in its sole discretion, withhold
such amounts in accordance with this paragraph (d). In the event that a
Certificateholder wishes to apply for a refund of any such withholding tax, the
Owner Trustee shall reasonably cooperate with such Certificateholder in making
such claim so long as such Certificateholder agrees to reimburse the Owner
Trustee for any out-of-pocket expenses incurred.

                  SECTION 5.3 Method of Payment. Subject to Section 9.1(c),
distributions required to be made to Certificateholders on any Payment Date
shall be made to each Certificateholder of record on the preceding Record Date
either by wire transfer, in immediately available funds, to the account of such
Holder at a bank or other entity having appropriate facilities therefor, if (i)
such Certificateholder shall have provided to the Certificate Registrar
appropriate written instructions at least five (5) Business Days prior to such
Payment Date, or (ii) such Certificateholder is the Depositor or, if not, by
check mailed to such Certificateholder at the address of such Holder appearing
in the Certificate Register. Notwithstanding the foregoing, the final
distribution in respect of any Certificate (whether on the Certificateholders'
Final Scheduled Payment Date or otherwise) will be payable only upon
presentation and surrender of such Certificate at the office or agency
maintained for that purpose by the Owner Trustee pursuant to Section 3.8.

                  SECTION 5.4 No Segregation of Monies; No Interest. Subject to
Sections 5.1 and 5.2, monies received by the Owner Trustee hereunder need not be
segregated in any manner

                                       21

<PAGE>

except to the extent required by law, the Indenture or the Sale and Servicing
Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.

                  SECTION 5.5 Accounting and Reports to the Certificateholders,
the Internal Revenue Service and Others. The Owner Trustee shall, based on
information provided by the Depositor, (a) maintain (or cause to be maintained)
the books of the Trust on the basis of a fiscal year ending December 31 and
based on the accrual method of accounting, (b) deliver to each
Certificateholder, as may be required by the Code and applicable Treasury
Regulations, such information as may be required (including Schedule K-1) to
enable each Certificateholder to prepare its Federal and state income tax
returns, (c) file such tax returns relating to the Trust (including a
partnership information return, IRS Form 1065), and make such elections as may
from time to time be required or appropriate under any applicable state or
Federal statute or rule or regulation thereunder so as to maintain the Trust's
characterization as a partnership for Federal income tax purposes, (d) cause
such tax returns to be signed in the manner required by law and (e) collect or
cause to be collected any withholding tax as described in and in accordance with
Section 5.2(c) with respect to income or distributions to Certificateholders.
The Owner Trustee shall elect under Section 1278 of the Code to include in
income currently any market discount that accrues with respect to the
Receivables. The Owner Trustee shall not make the election provided under
Section 754 of the Code.

                  The Owner Trustee may satisfy its obligations with respect to
this Section 5.5 by retaining, at the expense of the Depositor, a firm of
independent public accountants (the "Accountants") chosen by the Depositor which
shall perform the filing obligations of the Owner Trustee hereunder. The
Accountants will provide prior to [[ ] 15, 2000], a letter in form and substance
satisfactory to the Owner Trustee as to whether any Federal tax withholding on
Certificates is then required and, if required, the procedures to be followed
with respect thereto to comply with the requirements of the Code. The
Accountants shall be required to update the letter in each instance that any
additional tax withholding is subsequently required or any previously required
tax withholding shall no longer be required. The Owner Trustee shall be deemed
to have discharged its obligations pursuant to this Section upon its retention
of the Accountants, and the Owner Trustee shall not have any liability with
respect to the default or misconduct of the Accountants.

                  SECTION 5.6 Signature on Returns; Tax Matters Partner. (a) The
Depositor, as general partner for income tax purposes, shall sign, on behalf of
the Trust, the tax returns of the Trust.

                  (b) The Depositor shall be designated the "tax matters
partner" of the Trust pursuant to Section 6231(a)(7)(A) of the Code and
applicable Treasury Regulations.

                                       22

<PAGE>

                                   ARTICLE VI

                      AUTHORITY AND DUTIES OF OWNER TRUSTEE

                  SECTION 6.1 General Authority. The Owner Trustee is authorized
and directed to execute and deliver the Basic Documents to which the Trust is to
be a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party and any
amendment or other agreement, in each case, in such form as the Depositor shall
approve, as evidenced conclusively by the Owner Trustee's execution thereof and
the Depositor's execution of this Agreement, and to direct the Indenture Trustee
to authenticate and deliver Notes in the aggregate principal amount of $[ ]
(comprised of $[ ] in aggregate principal amount of Class A-1 Notes, $[ ] in
aggregate principal amount of Class A-2 Notes, $[ ] in aggregate principal
amount of Class A-3 Notes, $[ ] in aggregate principal amount of Class A-4
Notes and $[ ] in aggregate principal amount of Class B Notes). In addition to
the foregoing, the Owner Trustee is authorized to take all actions required of
the Trust pursuant to the Basic Documents. The Owner Trustee is further
authorized from time to time to take such action on behalf of the Trust as is
permitted by the Basic Documents and which the Servicer or the Administrator
recommends with respect to the Basic Documents, except to the extent that this
Agreement expressly requires the consent of Certificateholders for such action.

                  SECTION 6.2 General Duties. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged) all of its responsibilities
pursuant to the terms of this Agreement and the other Basic Documents to which
the Trust is a party and to administer the Trust in the interest of the
Certificateholders, subject to the lien of the Indenture and in accordance with
the provisions of this Agreement and the other Basic Documents. Notwithstanding
the foregoing, the Owner Trustee shall be deemed to have discharged its duties
and responsibilities hereunder and under the Basic Documents to the extent the
Administrator is required in the Administration Agreement to perform any act or
to discharge such duty of the Owner Trustee or the Trust hereunder or under any
other Basic Document, and the Owner Trustee shall not be held liable for the
default or failure of the Administrator to carry out its obligations under the
Administration Agreement.

                  SECTION 6.3 Action upon Instruction. (a) Subject to Article
IV, and in accordance with the terms of the Basic Documents, the
Certificateholders may, by written instruction, direct the Owner Trustee in the
management of the Trust.

                  (b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner

                                       23

<PAGE>

Trustee or is contrary to the terms hereof or of any Basic Document or is
otherwise contrary to law.

                  (c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any other Basic Document, the Owner Trustee shall promptly give
notice (in such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Certificateholders received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within ten (10)
days of such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the other Basic Documents, as it shall deem
to be in the best interests of the Certificateholders, and shall have no
liability to any Person for such action or inaction.

                  (d) In the event the Owner Trustee is unsure as to the
application of any provision of this Agreement or any other Basic Document or
any such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction and, to the extent that the Owner
Trustee acts or refrains from acting in good faith in accordance with any such
instruction received, the Owner Trustee shall not be liable, on account of such
action or inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within ten (10) days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Agreement or the
other Basic Documents, as it shall deem to be in the best interests of the
Certificateholders and shall have no liability to any Person for such action or
inaction.

                  SECTION 6.4 No Duties Except as Specified in this Agreement or
in Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee or the Trust is a party, except as expressly provided
by the terms of this Agreement or in any document or written instruction
received by the Owner Trustee pursuant to Section 6.3; and no implied duties or
obligations shall be read into this Agreement or any other Basic Document
against the Owner Trustee. The Owner Trustee shall have no responsibility for
filing any financing or continuation statement in any

                                       24

<PAGE>

public office at any time or to otherwise perfect or maintain the perfection of
any security interest or lien granted to it hereunder or to prepare or file any
Securities and Exchange Commission filing for the Trust or to record this
Agreement or any other Basic Document. The Owner Trustee nevertheless agrees
that it will, at its own cost and expense, promptly take all action as may be
necessary to discharge any lien (other than the lien of the Indenture) on any
part of the Owner Trust Estate that results from actions by, or claims against,
the Owner Trustee that are not related to the ownership or the administration of
the Owner Trust Estate.

                  SECTION 6.5 No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except in accordance
with (i) the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) the other Basic Documents to which the
Trust or the Owner Trust is a party and (iii) any document or instruction
delivered to the Owner Trustee pursuant to Section 6.3.

                  SECTION 6.6 Restrictions. The Owner Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (b) that, to the actual knowledge of the Owner Trustee, would (i)
affect the treatment of the Notes as indebtedness for Federal income or Delaware
or California income or franchise tax purposes, (ii) be deemed to cause a
taxable exchange of the Notes for Federal income or Delaware or California
income or franchise tax purposes or (iii) cause the Trust or any portion thereof
to be taxable as an association or publicly traded partnership taxable as a
corporation for Federal income or Delaware or California income or franchise tax
purposes. The Certificateholders shall not direct the Owner Trustee to take
action that would violate the provisions of this Section 6.6.

                                   ARTICLE VII

                           REGARDING THE OWNER TRUSTEE

                  SECTION 7.1 Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all monies actually received by it constituting
part of the Owner Trust Estate upon the terms of this Agreement to which the
Trust or Owner Trustee is a party and the other Basic Documents. The Owner
Trustee shall not be answerable or accountable hereunder or under any other
Basic Document under any circumstances, except (i) for its own willful
misconduct, bad faith or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the Owner
Trustee, in its individual capacity. In particular, but not by way of limitation
(and subject to the exceptions set forth in the preceding sentence):

                                       25

<PAGE>

                  (a) the Owner Trustee shall not be liable for any error of
judgment made in good faith by a responsible officer or employee of the Owner
Trustee;

                  (b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the provisions of
this Agreement at the instructions of any Certificateholder, the Indenture
Trustee, the Depositor, the Administrator or the Servicer;

                  (c) no provision of this Agreement or any other Basic Document
shall require the Owner Trustee to expend or risk its personal funds or
otherwise incur any financial liability in the performance of any of its rights
or duties hereunder, or under any other Basic Document, if the Owner Trustee
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured or
provided to it;

                  (d) under no circumstances shall the Owner Trustee be
personally liable for indebtedness evidenced by or arising under any of the
Basic Documents, including the principal of and interest on the Notes or
distributions on the Certificates.

                  (e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for or in
respect of the validity or sufficiency of the other Basic Documents, other than
the certificate of authentication on the Certificates, and the Owner Trustee
shall in no event assume or incur any liability, duty, or obligation to any
Noteholder or to any Certificateholder, other than as expressly provided for
herein and in the other Basic Documents;

                  (f) the Owner Trustee shall not be liable for the default or
misconduct of the Servicer, the Administrator, the Depositor or the Indenture
Trustee under any of the Basic Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations of the Trust
under this Agreement or the other Basic Documents that are required to be
performed by the Administrator under the Administration Agreement, the Servicer
under the Sale and Servicing Agreement or the Indenture Trustee under the
Indenture; and

                  (g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any other Basic Document, at the request, order or
direction of any of the Certificateholders, unless such Certificateholders have
offered to the Owner Trustee security or indemnity satisfactory to it against
the costs, expenses and liabilities that may be incurred by the Owner Trustee
therein or thereby; the right of the Owner Trustee to perform any discretionary
act enumerated in this Agreement or in any other Basic Document shall not be
construed as a duty, and the Owner Trustee shall not be answerable for other
than its willful misconduct, bad faith or negligence in the performance of any
such act.

                                       26

<PAGE>

                  SECTION 7.2 Furnishing of Documents. The Owner Trustee shall
furnish to the Certificateholders promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Basic Documents.

                  SECTION 7.3 Representations and Warranties. The Owner Trustee,
in its individual capacity, hereby represents and warrants to the Depositor, for
the benefit of the Certificateholders, that:

                  (a) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.

                  (b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.

                  (c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any Federal or Delaware law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order binding on
it, or constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.

                  SECTION 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee
may rely upon, shall be protected in relying upon, and shall incur no liability
to anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond, or other document or paper
believed by it to be genuine and believed by it to be signed by the proper party
or parties. The Owner Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Owner Trustee
may for all purposes hereof rely on a certificate, signed by the president or
any vice president or by the treasurer or other authorized officers of the
relevant party, as to such fact or matter and such certificate shall constitute
full protection to the Owner Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon.

                  (b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or the
other Basic Documents,

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<PAGE>

the Owner Trustee (i) may act directly or through its agents or attorneys
pursuant to agreements entered into with any of them, and the Owner Trustee
shall not be liable for the conduct or misconduct of such agents or attorneys if
such agents or attorneys shall have been selected by the Owner Trustee with
reasonable care, and (ii) may consult with counsel, accountants and other
skilled Persons to be selected with reasonable care and employed by it. The
Owner Trustee shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such Persons and not contrary to this Agreement or
any other Basic Document.

                  SECTION 7.5 Not Acting in Individual Capacity. Except as
provided in this Article VII, in accepting the trusts hereby created, Wilmington
Trust Company acts solely as Owner Trustee hereunder and not in its individual
capacity, and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any other Basic Document
shall look only to the Owner Trust Estate for payment or satisfaction thereof.

                  SECTION 7.6 Owner Trustee Not Liable for Certificates or
Receivables. The recitals contained herein and in the Certificates (other than
the signature and countersignature of the Owner Trustee on the Certificates)
shall be taken as the statements of the Depositor, and the Owner Trustee assumes
no responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
other Basic Document or of the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates) or the Notes, or of
any Receivable or related documents. The Owner Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Receivable, or the perfection and priority of any security
interest created by any Receivable in any Financed Vehicle or the maintenance of
any such perfection and priority, or for or with respect to the sufficiency of
the Owner Trust Estate or its ability to generate the payments to be distributed
to Certificateholders under this Agreement or the Noteholders under the
Indenture, including: the existence, condition and ownership of any Financed
Vehicle; the existence and enforceability of any insurance thereon; the
existence and contents of any Receivable on any computer or other record
thereof; the validity of the assignment of any Receivable to the Trust or any
intervening assignment; the completeness of any Receivable; the performance or
enforcement of any Receivable; the compliance by the Depositor or the Servicer
with any warranty or representation made under any Basic Document or in any
related document, or the accuracy of any such warranty or representation or any
action of the Indenture Trustee, the Administrator or the Servicer or any
subservicer taken in the name of the Owner Trustee.

                  SECTION 7.7 Owner Trustee May Own Certificates and Notes. The
Owner Trustee, in its individual or any other capacity, may become the owner or
pledgee of Certificates or Notes and may deal with the Depositor, the Servicer,
the Administrator and the Indenture

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<PAGE>

Trustee in banking transactions with the same rights as it would have if it were
not Owner Trustee.

                                  ARTICLE VIII

                          COMPENSATION OF OWNER TRUSTEE

                  SECTION 8.1 Owner Trustee's Fees and Expenses. The Owner
Trustee shall receive as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between the Depositor
and the Owner Trustee, and the Owner Trustee shall be entitled to and reimbursed
by the Depositor for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder.

                  SECTION 8.2 Indemnification. The Depositor shall be liable as
prime obligor for, and shall indemnify Wilmington Trust Company and the Owner
Trustee and its successors, assigns, agents and servants (collectively, the
"Indemnified Parties") from and against, any and all liabilities, obligations,
losses, damages, taxes, claims, actions and suits, and any and all reasonable
costs, expenses and disbursements (including reasonable legal fees and expenses)
of any kind and nature whatsoever (collectively, "Expenses") which may at any
time be imposed on, incurred by, or asserted against Wilmington Trust Company or
the Owner Trustee or any Indemnified Party in any way relating to or arising out
of this Agreement, the other Basic Documents, the Owner Trust Estate, the
administration of the Owner Trust Estate or the action or inaction of the Owner
Trustee hereunder; provided that the Depositor shall not be liable for or
required to indemnify an Indemnified Party from and against Expenses arising or
resulting from any of the matters described in the third sentence of Section
7.1. The Depositor will in no event be entitled to make any claim upon the Trust
Property for the payment or reimbursement of any Expenses. The indemnities
contained in this Section 8.2 shall survive the resignation or termination of
the Owner Trustee or the termination of this Agreement. In the event of any
claim, action or proceeding for which indemnity will be sought pursuant to this
Section 8.2, the Owner Trustee's choice of legal counsel shall be subject to the
approval of the Depositor, which approval shall not be unreasonably withheld.

                  SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to
the Owner Trustee pursuant to this Article VIII shall be deemed not to be a part
of the Owner Trust Estate immediately after such payment.

                                   ARTICLE IX

                                   TERMINATION

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<PAGE>

                  SECTION 9.1 Termination of Trust Agreement. (a) This Agreement
(other than the provisions of Article VIII) and the Trust shall dissolve,
wind-up and terminate in accordance with Section 3808 of the Business Trust
Statute and be of no further force or effect (i) upon the payment to the
Noteholders and the Certificateholders of all amounts required to be paid to
them pursuant to the terms of the Indenture, the Sale and Servicing Agreement
and Article V or (ii) on the Payment Date next succeeding the month which is one
year after the maturity or other liquidation of the last Receivable and the
disposition of any amounts received upon liquidation of any property remaining
in the Trust in accordance with the terms and priorities set forth in the
Indenture, the Sale and Servicing Agreement and Article V. The bankruptcy,
liquidation, dissolution, death or incapacity of any Certificateholder shall not
(x) operate to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Trust or Owner Trust Estate nor (z) otherwise affect the
rights, obligations and liabilities of the parties hereto.

                  (b) No Certificateholder shall be entitled to revoke or
terminate the Trust.

                  (c) Notice of any termination of the Trust, specifying the
Payment Date upon which the Certificateholders shall surrender their
Certificates, to the Paying Agent for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five (5) Business Days of receipt of notice of
such termination from the Servicer, stating (i) the Payment Date upon or with
respect to which final payment of the Certificates shall be made upon
presentation and surrender of the Certificates, at the office of the Paying
Agent therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Paying Agent therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar (if other than the
Owner Trustee) and the Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates, the
Paying Agent shall cause to be distributed to Certificateholders, amounts
distributable on such Payment Date pursuant to Section 5.2.

                  In the event that all of the Certificateholders shall not
surrender their Certificates, as the case may be, for cancellation within six
(6) months after the date specified in the above mentioned written notice, the
Owner Trustee shall give a second written notice to the remaining
Certificateholders to surrender their Certificates, respectively, for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Owner Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders, as the case may

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<PAGE>

be, concerning surrender of their Certificates as the case may be, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Subject to applicable escheat laws, any funds
remaining in the Trust after exhaustion of such remedies shall be distributed by
the Owner Trustee to the Depositor.

                  (d) Upon the winding up of the Trust and its termination, the
Owner Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.

                  SECTION 9.2 Prepayment of the Certificates. (a) The
Certificates shall be prepaid in whole, but not in part, at the direction of the
Servicer pursuant to Section 9.1(a) of the Sale and Servicing Agreement, on any
Payment Date on which the Servicer exercises its option to purchase the assets
of the Trust pursuant to said Section 9.1(a), and the amount paid by the
Servicer shall be treated as collections of Receivables and applied to pay the
unpaid principal amount of the Notes plus accrued and unpaid interest thereon,
together with the unpaid principal amount of the Certificates. The Servicer
shall furnish the Rating Agencies and the Certificateholders notice of such
prepayment. If the Certificates are to be prepaid pursuant to this Section
9.2(a), the Servicer shall furnish notice of such election to the Owner Trustee
not later than twenty (20) days prior to the Prepayment Date and the Trust shall
deposit by 10:00 A.M. (New York City time) on the Prepayment Date in the
Certificate Distribution Account the Prepayment Price of the Certificates to be
prepaid, whereupon all such Certificates shall be due and payable on the
Prepayment Date.

                  (b) In addition, following payment in full of the Notes, the
Holders of 100% of the Certificate Balance may agree to liquidate the Trust and
prepay the Certificates.

                  (c) Notice of prepayment under Section 9.2(a) shall be given
by the Owner Trustee by first-class mail, postage prepaid, or by facsimile
mailed or transmitted immediately following receipt of notice from the Trust or
Servicer pursuant to Section 9.2(a), but not later than ten (10) days prior to
the applicable Prepayment Date, to each Holder of Certificate as of the close of
business on the Record Date preceding the applicable Prepayment Date, at such
Holder's address or facsimile number appearing in the Certificate Register.

                  All notices of prepayment shall state:

                           (i)   the Prepayment Date;

                           (ii)  the Prepayment Price; and

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<PAGE>

                           (iii) the place where such Certificates are to be
         surrendered for payment of the Prepayment Price (which shall be the
         office or agency of the Owner Trustee to be maintained as provided in
         Section 3.8).

Notice of prepayment of the Certificates shall be given by the Owner Trustee in
the name and at the expense of the Trust. Failure to give notice of prepayment,
or any defect therein, to any Holder of any Certificate shall not impair or
affect the validity of the prepayment of any other Certificate.

                  (d) The Certificates to be prepaid shall, following notice of
prepayment as required by Section 9.2(b), on the Prepayment Date be paid by the
Trust at the Prepayment Price and (unless the Trust shall default in the payment
of the Prepayment Price) no interest shall accrue on the Prepayment Price for
any period after the date to which accrued interest is calculated for purposes
of calculating the Prepayment Price. Following payment in full of the Prepayment
Price, this Agreement and the Trust shall terminate.

                                    ARTICLE X

             SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES

                  SECTION 10.1 Eligibility Requirements for Owner Trustee. The
Owner Trustee shall at all times (i) be a corporation satisfying the provisions
of Section 3807(a) of the Business Trust Statute; (ii) be authorized to exercise
corporate trust powers; (iii) have a combined capital and surplus of at least
$50,000,000 and shall be subject to supervision or examination by Federal or
state authorities; and (iv) shall have (or shall have a parent that has) a
long-term debt rating of investment grade by each of the Rating Agencies or be
otherwise acceptable to the Rating Agencies. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section 10.1, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Owner Trustee shall
cease to be eligible in accordance with the provisions of this Section 10.1, the
Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.2.

                  SECTION 10.2 Resignation or Removal of Owner Trustee. The
Owner Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Administrator. Upon receiving
such notice of resignation, the Administrator shall promptly appoint a successor
Owner Trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Owner Trustee and one copy to the successor
Owner Trustee. If no successor Owner Trustee shall have been so appointed and
have accepted appointment within thirty (30) days after the giving of such
notice of resignation, the

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<PAGE>

resigning Owner Trustee may petition any court of competent jurisdiction for the
appointment of a successor Owner Trustee.

                  If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator may remove the Owner
Trustee. If the Administrator shall remove the Owner Trustee under the authority
of the immediately preceding sentence, the Administrator shall promptly appoint
a successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed and one
copy to the successor Owner Trustee and payment of all fees owed to the outgoing
Owner Trustee.

                  Any resignation or removal of the Owner Trustee and
appointment of a successor Owner Trustee pursuant to any of the provisions of
this Section 10.2 shall not become effective until acceptance of appointment by
the successor Owner Trustee pursuant to Section 10.3 and payment of all fees and
expenses owed to the outgoing Owner Trustee. The Administrator shall provide
notice of such resignation or removal of the Owner Trustee to the
Certificateholders, the Indenture Trustee, the Noteholders and each of the
Rating Agencies.

                  SECTION 10.3 Successor Owner Trustee. Any successor Owner
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to the Administrator and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon the resignation
or removal of the predecessor Owner Trustee shall become effective, and such
successor Owner Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties, and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Owner Trustee. The predecessor Owner Trustee shall, upon payment of its fees and
expenses, deliver to the successor Owner Trustee all documents and statements
and monies held by it under this Agreement, and the Administrator and the
predecessor Owner Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties, and
obligations.

                  No successor Owner Trustee shall accept appointment as
provided in this Section 10.3 unless, at the time of such acceptance, such
successor Owner Trustee shall be eligible pursuant to Section 10.1.

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<PAGE>

                  Any successor Owner Trustee appointed pursuant to this Section
10.3 shall file an amendment to the Certificate of Trust reflecting the name and
principal place of business of such succession in the state of Delaware.

                  Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section 10.3, the Administrator shall mail notice of the
successor of such Owner Trustee to all Certificateholders, the Indenture
Trustee, the Noteholders and the Rating Agencies. If the Administrator shall
fail to mail such notice within ten (10) days after acceptance of appointment by
the successor Owner Trustee, the successor Owner Trustee shall cause such notice
to be mailed at the expense of the Administrator.

                  SECTION 10.4 Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor to the Owner Trustee
hereunder; provided that such corporation shall be eligible pursuant to Section
10.1, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further, however, that the Owner Trustee shall mail
notice of such merger or consolidation to the Rating Agencies.

                  SECTION 10.5 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Owner Trust Estate or any Financed Vehicle may at the time be located, the
Administrator and the Owner Trustee acting jointly shall at any time have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Owner Trustee to act as co-trustee, jointly with the
Owner Trustee, or separate trustee or separate trustees, of all or any part of
the Owner Trust Estate, and to vest in such Person, in such capacity, such title
to the Trust, or any part thereof, and, subject to the other provisions of this
Section 10.5, such powers, duties, obligations, rights and trusts as the
Administrator and the Owner Trustee may consider necessary or desirable. If the
Administrator shall not have joined in such appointment within fifteen (15) days
after the receipt by it of a request so to do, the Owner Trustee alone shall
have the power to make such appointment. No co-trustee or separate trustee under
this Agreement shall be required to meet the terms of eligibility as a successor
trustee pursuant to Section 10.1 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.3.

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

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<PAGE>

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

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

                           (iii) the Administrator and the Owner Trustee acting
         jointly may at any time accept the resignation of or remove any
         separate trustee or co-trustee.

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

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

                                   ARTICLE XI

                                  MISCELLANEOUS

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<PAGE>

                  SECTION 11.1 Supplements and Amendments. (a) This Agreement
may be amended by the Depositor and the Owner Trustee, with prior written notice
to the Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement inconsistent with any other provision of this
Agreement or for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions in this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
satisfactory to the Owner Trustee and the Indenture Trustee adversely affect in
any material respect the interests of any Noteholder or Certificateholder and
provided further that an Opinion of Counsel shall be furnished to the Indenture
Trustee and the Owner Trustee to the effect that such amendment (A) will not
materially adversely affect the Federal or any Applicable Tax State income or
franchise taxation of any outstanding Note or Certificate, or any Holder thereof
and (B) will not cause the Trust to be taxable as a corporation for Federal or
any Applicable Tax State income or franchise tax purposes.

                  (b) This Agreement may also be amended from time to time by
the Depositor and the Owner Trustee, with prior written notice to the Rating
Agencies, with the consent of the Holders (as defined in the Indenture) of Notes
evidencing not less than a majority of the aggregate principal amount of the
then outstanding Notes, voting as a group, and the consent of the Holders of
Certificates evidencing not less than a majority of the Certificate Balance, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Noteholders or the Certificateholders; provided, however, that no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, or change the allocation or priority of,
collections of payments on Receivables or distributions that are required to be
made on any Note or Certificate, or change any Note Interest Rate, or (ii)
reduce the aforesaid percentage of the principal amount of the then outstanding
Notes and the Certificate Balance required to consent to any such amendment,
without the consent of the holders of all the outstanding Notes and Certificates
affected thereby or (iii) adversely affect the ratings of any Class of Notes by
the Rating Agencies without the consent, respectively, of holders of Notes
evidencing not less than 66 2/3% of the aggregate principal amount of the then
outstanding Notes of such Class or (iv) amend the activities of the Trust as
permitted in Section 2.3; and provided further that an Opinion of Counsel shall
be furnished to the Indenture Trustee and the Owner Trustee to the effect that
such amendment (A) will not materially adversely affect the Federal or any
Applicable Tax State income or franchise taxation of any outstanding Note or
Certificate, or any Holder thereof and (B) will not cause the Trust to be
taxable as a corporation for Federal or any Applicable Tax State income or
franchise tax purposes.

                  (c) Promptly after the execution of any such amendment or
consent, the Owner Trustee shall furnish written notification of the substance
of such amendment or consent to each Certificateholder, the Indenture Trustee
and each of the Rating Agencies.

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<PAGE>

                  (d) It shall not be necessary for the consent of
Certificateholders, the Noteholders or the Indenture Trustee pursuant to this
Section 11.1 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Certificateholders provided for in this Agreement or in any other Basic
Document) and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe.

                  (e) Promptly after the execution of any amendment to the
Certificate of Trust, the Owner Trustee shall cause the filing of such amendment
with the Secretary of State.

                  (f) The Owner Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Owner Trustee's own rights,
duties or immunities under this Agreement or otherwise.

                  (g) Prior to the execution of any amendment to this Trust
Agreement or any amendment to any other agreement to which the Trust is a party,
the Owner Trustee shall be entitled to receive and conclusively rely upon an
Opinion of Counsel to the effect that such amendment is authorized or permitted
by the Basic Documents and that all conditions precedent in the Basic Documents
for the execution and delivery thereof by the Trust or the Owner Trustee, as the
case may be, have been satisfied.

                  SECTION 11.2 No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided beneficial interest
therein only in accordance with Articles V and IX. No transfer, by operation of
law or otherwise, of any right, title, or interest of the Certificateholders to
and in their beneficial interest in the Owner Trust Estate shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.

                  SECTION 11.3 Limitation on Rights of Others. The provisions of
this Agreement are solely for the benefit of the Owner Trustee, the Depositor,
the Administrator, the Certificateholders the Servicer and, to the extent
expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.

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<PAGE>

                  SECTION 11.4 Notices. (a) Unless otherwise expressly specified
or permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days after
mailing if mailed by certified mail, postage prepaid (except that notice to the
Owner Trustee shall be deemed given only upon actual receipt by the Owner
Trustee), if to the Owner Trustee, addressed to the Corporate Trust Office; if
to the Depositor, addressed to MMCA Auto Receivables Trust at the address of its
principal executive office first above written; or, as to each party, at such
other address as shall be designated by such party in a written notice to each
other party.

                  (b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.

                  SECTION 11.5 Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

                  SECTION 11.6 Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.

                  SECTION 11.7 Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Depositor, the Owner Trustee and their respective successors and each
Certificateholder and its successors and permitted assigns, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument or
action by a Certificateholder shall bind the successors and assigns of such
Certificateholder.

                  SECTION 11.8 Covenants of the Depositor. In the event that (a)
the principal balance of Receivables underlying the Certificates shall be
reduced by Realized Losses and (b) any litigation with claims in excess of
$1,000,000 to which the Depositor is a party which shall be reasonably likely to
result in a material judgment against the Depositor that the Depositor will not
be able to satisfy shall be commenced by a Certificateholder, during the period
beginning nine (9) months following the commencement of such litigation and
continuing until such litigation is dismissed or otherwise terminated (and, if
such litigation has resulted in a final judgment against the Depositor, such
judgment has been satisfied), the Depositor shall not pay

                                       38

<PAGE>

any dividend to MMCA, or make any distribution on or in respect of its capital
stock to MMCA, or repay the principal amount of any indebtedness of the
Depositor held by MMCA, unless (i) after giving effect to such payment,
distribution or repayment, the Depositor's liquid assets shall not be less than
the amount of actual damages claimed in such litigation or (ii) the Rating
Agency Condition shall have been satisfied with respect to any such payment,
distribution or repayment. The Depositor will not at any time institute against
the Trust any bankruptcy proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Certificates, the Notes, this Agreement or any of the other Basic Documents.

                  SECTION 11.9 No Petition; Subordination; Claims Against
Depositor. The Owner Trustee (not in its individual capacity but solely as Owner
Trustee), by entering into this Agreement, each Certificateholder, by accepting
a Certificate, and the Indenture Trustee and each Noteholder by accepting the
benefits of this Agreement, hereby covenant and agree that:

                  (a) they will not at any time institute against the Depositor
or the Trust, or join in any institution against the Depositor or the Trust of,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Certificates, the Notes, this Agreement or any of the other Basic Documents;

                  (b) any claim that they may have at any time against the
Subtrust Assets of any Subtrust unrelated to the Notes or the Certificates, and
any claim that they may have at any time against the Depositor that they may
seek to enforce against the Subtrust Assets of any Subtrust unrelated to the
Notes or the Certificates, shall be subordinate to the payment in full,
including post-petition interest, in the event that the Depositor becomes a
debtor or debtor in possession in a case under any applicable Federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect or
otherwise subject to any insolvency, reorganization, liquidation, rehabilitation
or other similar proceedings, of the claims of the holders of any Securities
related to such unrelated Subtrust and the holders of any other notes, bonds,
contracts or other obligations that are related to such unrelated Subtrust; and

                  (c) they hereby irrevocably make the election afforded by
Title 11 United States Code Section 1111(b)(1)(A)(i) to secured creditors to
receive the treatment afforded by Title 11 United States Code Section 1111(b)(2)
with respect to any secured claim that they may have at any time against the
Depositor. The obligations of the Depositor under this Agreement and the
Certificates are limited to the related Subtrust and the related Subtrust
Assets.

                  SECTION 11.10 No Recourse. Each Certificateholder, by
accepting a Certificate, acknowledges that such Certificateholder's Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Depositor, the Servicer, the Administrator, the Owner
Trustee, the Indenture Trustee or any Affiliate thereof, and no recourse

                                       39

<PAGE>

may be had against such parties or their assets, except as may be expressly set
forth or contemplated in this Agreement, the Certificates, or the other Basic
Documents.

                  SECTION 11.11 Headings. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.

                  SECTION 11.12 Governing Law. This Agreement shall be construed
in accordance with the laws of the State of Delaware and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.

                                       40

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.

                               MMCA AUTO RECEIVABLES TRUST,
                               as Depositor

                               By: ____________________________________
                                   Name:
                                   Title:

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

                               By: _____________________________________
                                   Name:
                                   Title:

<PAGE>

                                                                      EXHIBIT A

NUMBER                                                             $___________
R-1
                                               THIS CERTIFICATE MAY
                                               NOT BE TRANSFERRED
                                               BY A STOCK POWER BUT
                                               ONLY AS SET FORTH
                                               BELOW.

                       SEE REVERSE FOR CERTAIN DEFINITIONS

                  THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY
STATE SECURITIES OR BLUE SKY LAW OF ANY STATE OF THE UNITED STATES. THE HOLDER
HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES FOR THE BENEFIT OF THE TRUST AND
THE DEPOSITOR THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN A DENOMINATION OF AT LEAST $1,000,000, ONLY IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS, AND ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE
MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER,
RESALE, PLEDGE, OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
SUBJECT TO (A) THE RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF A
CERTIFICATE SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT C TO THE TRUST
AGREEMENT REFERRED TO BELOW AND (B) THE RECEIPT BY THE TRUST AND THE CERTIFICATE
REGISTRAR OF A LETTER SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT D TO THE
TRUST AGREEMENT, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE), SUBJECT TO THE RECEIPT BY THE TRUST
AND THE CERTIFICATE REGISTRAR OF SUCH EVIDENCE ACCEPTABLE TO THE TRUST THAT SUCH
REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE TRUST AGREEMENT
AND THE SECURITIES ACT AND OTHER APPLICABLE LAWS, (3) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT

                                       A-1

<PAGE>

PURSUANT TO ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUST AND THE CERTIFICATE
REGISTRAR OF A LETTER SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT E TO THE
TRUST AGREEMENT OR (B) THE RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF
SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUST THAT SUCH REOFFER, RESALE, PLEDGE OR
TRANSFER IS IN COMPLIANCE WITH THE TRUST AGREEMENT AND THE SECURITIES ACT AND
OTHER APPLICABLE LAWS, OR (4) TO THE DEPOSITOR OR ITS AFFILIATES, IN EACH CASE
IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND
SECURITIES AND BLUE SKY LAWS OF THE STATES OF THE UNITED STATES. IN ADDITION,
EXCEPT IN THE CASE OF TRANSFERS TO EXISTING CERTIFICATEHOLDERS, THIS CERTIFICATE
MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY WITH THE EXPRESS
WRITTEN CONSENT OF THE DEPOSITOR (WHICH CONSENT MAY BE WITHHELD FOR ANY REASON
OR FOR NO REASON).

                  THE PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE AS SET
FORTH IN THE TRUST AGREEMENT.  ACCORDINGLY, THE OUTSTANDING
PRINCIPAL OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.

                                       A-2

<PAGE>

                          MMCA AUTO OWNER TRUST 2000-2

                            ASSET BACKED CERTIFICATE

evidencing a beneficial interest in the property of the Trust, as defined below,
which property includes a pool of retail installment sale contracts secured by
new and used automobiles and light-duty trucks sold from time to time to MMCA
Auto Receivables Trust by Mitsubishi Motors Credit of America, Inc. and sold by
MMCA Auto Receivables Trust from time to time to the Trust. The property of the
Trust (other than the Certificate Distribution Account and the proceeds thereof)
has been pledged to the Indenture Trustee pursuant to the Indenture to secure
the payment of the Notes issued thereunder.

(This Certificate does not represent an interest in or obligation of Mitsubishi
Motors Credit of America, Inc., MMCA Auto Receivables Trust or any of their
respective affiliates, except to the extent described below.)

                  THIS CERTIFIES THAT MMCA AUTO RECEIVABLES TRUST is the
registered owner of a ____________________________ DOLLARS nonassessable,
fully-paid, beneficial interest in Certificates of MMCA Auto Owner Trust 2000-2
(the "Trust") formed by MMCA Auto Receivables Trust, a Delaware business trust
(the "Depositor"). The Certificates have an aggregate Initial Certificate
Balance of $_______.

                  OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION

         This is one of the Certificates referred to in the within-mentioned
Trust Agreement.

Dated: ________________

WILMINGTON TRUST COMPANY                   WILMINGTON TRUST COMPANY
not in its individual capacity but  or     not in its individual capacity but
solely as Owner Trustee                    solely as Owner Trustee

By:__________________________________      By:  WILMINGTON TRUST COMPANY
     Responsible Officer                          as Authenticating Agent

                                                By:____________________________
                                                   Responsible Officer

                                       A-3

<PAGE>

                  The Trust was created pursuant to an Trust Agreement, dated as
of November [ ], 2000 (as amended, supplemented or otherwise modified and in
effect from time to time, the "Trust Agreement"), by and between the Depositor
and Wilmington Trust Company, as owner trustee (the "Owner Trustee"), a summary
of certain of the pertinent provisions of which is set forth below. To the
extent not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Trust Agreement or the Sale and Servicing
Agreement, dated as of November [ ], 2000 (as amended, supplemented or otherwise
modified and in effect from time to time, the "Sale and Servicing Agreement"),
by and among the Trust, the Depositor, as seller (in such capacity, the
"Seller"), and Mitsubishi Motors Credit of America, Inc., as servicer (the
"Servicer"), as applicable.

                  This Certificate is one of the duly authorized Certificates
designated as "Asset Backed Certificates" (herein called the "Certificates").
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound. The property of the Trust includes (i) a pool of retail installment
sale contracts for new and used automobiles and light-duty trucks and certain
rights and obligations thereunder (the "Receivables"), (ii) with respect to
Actuarial Receivables, monies due thereunder on or after the related Cutoff Date
(including Payaheads) and, with respect to Simple Interest Receivables, monies
received thereunder on or after the related Cutoff Date; (iii) the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Trust in the Financed Vehicles; (iv)
all rights to receive proceeds with respect to the Receivables from claims on
any physical damage, theft, credit life or disability insurance policies
covering the Financed Vehicles or Obligors; (v) all rights to receive proceeds
with respect to the Receivables from recourse to Dealers thereon pursuant to the
Dealer Agreements; (vi) all of the Seller's rights to the Receivable Files;
(vii) the Trust Accounts and all amounts, securities, financial assets,
investments and other property deposited in or credited to any of the foregoing
and all proceeds thereof; (viii) all of the rights under the Sale and Servicing
Agreement and the Yield Supplement Agreement, (ix) all of the rights under the
Purchase Agreement, including the right of the Seller to cause MMCA to
repurchase Receivables from the Seller; (x) all payments and proceeds with
respect to the Receivables held by the Servicer; (xi) all property (including
the right to receive Liquidation Proceeds and Recoveries and Financed Vehicles
and the proceeds thereof acquired by the Trust pursuant to the terms of the
Final Payment Receivables), guarantees and other collateral securing a
Receivable (other than a Receivable repurchased by the Servicer or purchased by
the Seller); (xii) all rebates of premiums and other amounts relating to
insurance policies and other items financed under the Receivables in effect as
of the related Cutoff Date; and (xiii) all present and future claims, demands,
causes of action and choses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds of
the conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts,

                                       A-4

<PAGE>

insurance proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing. THE RIGHTS OF THE TRUST IN THE FOREGOING PROPERTY OF THE
TRUST (OTHER THAN THE CERTIFICATE DISTRIBUTION ACCOUNT AND THE PROCEEDS THEREOF)
HAVE BEEN PLEDGED TO THE INDENTURE TRUSTEE TO SECURE THE PAYMENT OF THE NOTES.

                  Under the Trust Agreement, there will be distributed on the
fifteenth day of each month or, if such fifteenth day is not a Business Day, the
next Business Day (each, a "Payment Date"), commencing [      ] 15, 2000, to the
Person in whose name this Certificate is registered at the close of business on
the fourteenth day of such calendar month (the "Record Date") such
Certificateholder's percentage interest in the amount to be distributed to
Certificateholders on such Payment Date; provided, however, that principal will
be distributed to the Certificateholders on each Payment Date (to the extent of
funds remaining after the Total Servicing Fee, all required payments on Notes
and any required deposit to the Reserve Account and the Supplemental Reserve
Account have been made on such Payment Date). Notwithstanding the foregoing,
following the occurrence and during the continuation of an Event of Default
under the Indenture which has resulted in an acceleration of the Notes or
following certain events of insolvency with respect to the Depositor, no
distributions of principal or interest will be made on the Certificates until
all the Notes have been paid in full.

                  THE HOLDER OF THIS CERTIFICATE ACKNOWLEDGES AND AGREES THAT
ITS RIGHTS TO RECEIVE DISTRIBUTIONS IN RESPECT OF THIS CERTIFICATE ARE
SUBORDINATED TO THE RIGHTS OF THE NOTEHOLDERS AS DESCRIBED IN THE SALE AND
SERVICING AGREEMENT, THE INDENTURE AND THE TRUST AGREEMENT.

                  It is the intent of the Depositor, the Servicer and the
Certificateholders that, for purposes of Federal income, state and local income
tax and any other income taxes, the Trust will be treated as a partnership and
the Certificateholders (including the Depositor) will be treated as partners in
that partnership. The Depositor and the other Certificateholders by acceptance
of a Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Certificates for such tax purposes as partnership interests in
the Trust.

                  Each Certificateholder, by its acceptance of a Certificate,
covenants and agrees that such Certificateholder will not at any time institute
against the Depositor or the Trust, or join in any institution against the
Depositor or the Trust of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Certificates, the Trust Agreement or any
of the other Basic Documents.

                                       A-5

<PAGE>

                  Distributions on this Certificate will be made as provided in
the Trust Agreement by the Owner Trustee or the Paying Agent by wire transfer or
check mailed to the Certificateholder of record in the Certificate Register
without the presentation or surrender of this Certificate or the making of any
notation hereon. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Owner Trustee of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency maintained for the purpose by the Owner Trustee in Wilmington, Delaware.

                  Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

                  Unless the certificate of authentication hereon shall have
been executed by a Responsible Officer of the Owner Trustee, by manual
signature, this Certificate shall not entitle the Holder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agreement or be valid for
any purpose.

                  This Certificate shall be construed in accordance with the
laws of the State of Delaware, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.

                                       A-6

<PAGE>

                  In WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust
and not in its individual capacity, has caused this Certificate to be duly
executed.

                             MMCA AUTO OWNER TRUST 2000-2

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

                             By: __________________________________________
                                         Responsible Officer

                                       A-7

<PAGE>

                            [REVERSE OF CERTIFICATE]

                  The Certificates do not represent an obligation of, or an
interest in, the Depositor, the Servicer, the Administrator, the Owner Trustee
or any Affiliates of any of them and no recourse may be had against such parties
or their assets, except as may be expressly set forth or contemplated herein, in
the Trust Agreement or in the other Basic Documents. This Certificate has been
executed by Wilmington Trust Company not in its individual capacity but solely
in its capacity as Owner Trustee of the Trust, and in no event shall Wilmington
Trust Company in its individual capacity have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Trust hereunder, as to all of which recourse shall be solely to the assets of
the Trust. In addition, this Certificate is not guaranteed by any governmental
agency or instrumentality and is limited in right of payment to certain
collections with respect to the Receivables (and certain other amounts), all as
more specifically set forth herein and in the Sale and Servicing Agreement. The
Trust will furnish, upon the request of any holder of a Certificate, such
information as is specified in paragraph (d)(4) of Rule 144A of the Securities
Act with respect to the Trust. A registration statement, which includes the
Trust Agreement as an exhibit thereto, has been filed with the Securities and
Exchange Commission with respect to the Notes of the Trust issued concurrently
with this Certificate.

                  The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Trust Agreement at any time by the Depositor and the Owner Trustee with the
consent of the Holders of the Notes and the Holders of the Certificates each
voting as a class evidencing not less than a majority of the principal amount of
the then outstanding Notes and the Certificate Balance, respectively. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Certificate and of any Certificate
issued upon the registration of Transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Trust Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.

                  This Certificate may be Transferred only under the
circumstances described in Section 3.4 of the Trust Agreement, which, among
other things, requires that each prospective transferee represent in writing in
the form provided as an exhibit to the Trust Agreement that it will not acquire
or Transfer the Certificates through an established securities market, is not
and will not become, except in certain circumstances, a partnership, Subchapter
S corporation or grantor trust for U.S. Federal income tax purposes, and will
not acquire the Certificates for or on behalf of an employee benefit plan,
except in certain limited circumstances. Any attempted Transfer in contravention
of the restrictions and conditions of Section 3.4 of the Trust Agreement shall
be null and void. As provided in the Trust Agreement, the Transfer of this
Certificate is

                                       A-8

<PAGE>

registerable in the Certificate Register upon surrender of this Certificate for
registration of Transfer at the offices or agencies of the Certificate Registrar
maintained by the Owner Trustee in Wilmington, Delaware, ACCOMPANIED BY THE
WRITTEN REPRESENTATIONS REQUIRED BY THE TRUST AGREEMENT AND, IF THE DEPOSITOR
HAS CONSENTED TO SUCH TRANSFER, a written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate interest
in the Trust will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is Wilmington Trust
Company.

                  Except for Certificates issued to the Depositor, the
Certificates are issuable only as registered Certificates without coupons in
denominations of $1,000,000 and in integral multiples of $1,000 in excess
thereof. Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of Transfer or exchange, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.

                  The Owner Trustee, the Certificate Registrar and any agent of
the Owner Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Owner Trustee, the Certificate Registrar or any such agent shall be
affected by any notice to the contrary.

                  The obligations and responsibilities created by the Trust
Agreement and the Trust created thereby shall terminate upon the payment to the
Noteholders and the Certificateholders of all amounts required to be paid to
them pursuant to the Indenture, the Trust Agreement and the Sale and Servicing
Agreement and any remaining assets of the Trust shall be distributed to the
Depositor, in its capacity as Depositor. The Servicer of the Receivables may at
its option purchase the assets of the Trust at a price specified in the Sale and
Servicing Agreement, and such purchase of the Receivables and other property of
the Trust will effect early retirement of the Notes and the Certificates;
however, such right of purchase is exercisable only as of the last day of any
Collection Period as of which the Pool Balance is less than or equal to 10% of
the Initial Pool Balance.

                  The Holder of this Certificate, by acceptance of this
Certificate, covenants and agrees by accepting the benefits of the Trust
Agreement that any claim that such Holder may have at any time against the
Subtrust Assets of any Subtrust unrelated to the Certificates, and any claim
that such Holder may have against the Depositor that such Holder may seek to
enforce against the Subtrust Assets of any Subtrust unrelated to the
Certificates, shall be subordinate to the payment in full, including
post-petition interest, in the event that the Depositor becomes a debtor or
debtor in possession in a case under any applicable Federal or state bankruptcy,

                                       A-9

<PAGE>

insolvency or other similar law now or hereafter in effect or otherwise subject
to any insolvency, reorganization, liquidation, rehabilitation or other similar
proceedings, of the claims of the holders of any Securities related to such
unrelated Subtrust and the holders of any other notes, bonds, contracts or other
obligations that are related to such unrelated Subtrust. The obligations of the
Depositor represented by this Certificate are limited to the related Subtrust
and the related Subtrust Assets.

                  EACH HOLDER, BY ACCEPTANCE OF A CERTIFICATE, HEREBY
IRREVOCABLY MAKES THE ELECTION AFFORDED BY TITLE 11 UNITED STATES CODE SECTION
1111(b)(1)(A)(i) TO SECURED CREDITORS TO RECEIVE THE TREATMENT AFFORDED BY TITLE
11 UNITED STATES CODE SECTION 1111(b)(2) WITH RESPECT TO ANY SECURED CLAIM THAT
SUCH HOLDER MAY HAVE AT ANY TIME AGAINST THE DEPOSITOR.

                                      A-10

<PAGE>

                                   ASSIGNMENT

                  FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE

________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)

________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing

________________________________________________________________  Attorney to
transfer said Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.

Dated:

                               ______________________________________________*/
                                           Signature Guaranteed:

                               ______________________________________________*/
                                           Signature Guaranteed:

*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.

                                      A-11

<PAGE>

                                                                      EXHIBIT B

                         [FORM OF CERTIFICATE OF TRUST]

                             CERTIFICATE OF TRUST OF
                          MMCA AUTO OWNER TRUST 2000-2

                  This Certificate of Trust of MMCA AUTO OWNER TRUST 2000-2 (the
"Trust") is being duly executed and filed by the Undersigned as trustee, to form
a business trust under the Delaware Business Trust Act (12 Del. Code, ss. 3801
et seq.) (the "Act").

                  1. Name. The name of the business trust formed hereby is MMCA
AUTO OWNER TRUST 2000-2.

                  2. Delaware Trustee. The name and business address of the
trustee of the Trust in the State of Delaware is Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration.

                  3. Effective Date. This Certificate of Trust shall be
effective upon filing.

                  IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust in accordance with Section
3811 of the Act.

                            Wilmington, Trust Company
                            as trustee

                            By: ___________________________________________
                                Name:
                                Title:

                                       B-1

<PAGE>

                                                                      EXHIBIT C

                   [FORM OF RULE 144A TRANSFEROR CERTIFICATE]

                                                                       [Date]

Wilmington Trust Company
  as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890-0001
Attention:  Corporate Trust Administration

Wilmington Trust Company
  as Certificate Registrar
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890-0001
Attention:  Corporate Trust Administration

Ladies and Gentlemen:

                  This is to notify you as to the transfer of $      [*] in
denomination of Asset Backed Certificates (the "Certificates") of MMCA Auto
Owner Trust 2000-2 (the "Trust").

                  The undersigned is the holder of the Certificates and with
this notice hereby deposits with the Owner Trustee $     [*] in denomination of
Certificates and requests that Certificates in the same aggregate denomination
be issued, executed and authenticated and registered to the purchaser on       ,
         , as specified in the Amended and Restated Trust Agreement dated as of
 November [ ], 2000 relating to the Certificates, as follows:

                  Name:                     Denominations:        [*]
                  Address:
                  Taxpayer I.D. No:

                  The undersigned represents and warrants that the undersigned
(i) reasonably believes the purchaser is a "qualified institutional buyer," as
defined in Rule 144A under the Securities Act of 1933 (the "Act"), (ii) such
purchaser has acquired the Certificates in a transaction effected in

____________________

[*  MINIMUM OF $1,000,000]

                                       C-1

<PAGE>

accordance with the exemption from the registration requirements of
the Act provided by Rule 144A and, (iii) if the purchaser has purchased the
Certificates for one or more accounts for which it is acting as fiduciary or
agent, (A) each such account is a qualified institutional buyer and (B) the
purchaser is acquiring Certificates for its own account or for one or more
institutional accounts for which it is acting as fiduciary or agent in a minimum
amount equivalent to at least $1,000,000 for each such account.

                                    Very truly yours,

                                           [NAME OF HOLDER
                                           OF CERTIFICATES]

                                           By: _______________________________
                                               Name:
                                               Title:

                                       C-2

<PAGE>

                                                                      EXHIBIT D

                          [FORM OF INVESTMENT LETTER --
                         QUALIFIED INSTITUTIONAL BUYER]

                                                                       [Date]

MMCA Auto Owner Trust 2000-2
  as Issuer
Wilmington Trust Company
  as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890-0001
Attention:  Corporate Trust Administration

Wilmington Trust Company
  as Certificate Registrar
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890-0001
Attention:  Corporate Trust Administration

Ladies and Gentlemen:

                  In connection with our proposed purchase of the Asset Backed
Certificates (the "Certificates") of MMCA Auto Owner Trust 2000-2 (the "Trust"),
a trust formed by MMCA Auto Receivables Trust (the "Depositor" or "Seller"), we
confirm that:

                  1. We agree to be bound by the restrictions and conditions set
forth in the Amended and Restated Trust Agreement dated as of November [ ], 2000
(the "Trust Agreement") relating to the Certificates and we agree to be bound
by, and not to resell, transfer, assign, participate, pledge, or otherwise
dispose of (any such act, a "Transfer") the Certificates except in compliance
with, such restrictions and conditions and the Securities Act of 1933, as
amended (the "Securities Act").

                  2. We have neither acquired nor will we Transfer any
Certificate we purchase (or any interest therein) or cause any such Certificates
(or any interest therein) to be marketed on or through an "established
securities market" within the meaning of section 7704(b)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"), including, without limitation, an
over-the-counter-market or an interdealer quotation system that regularly
disseminates firm buy or sell quotations.

                                      D-1

<PAGE>

                  3. We either (a) are not, and will not become, a partnership,
Subchapter S corporation, or grantor trust for U.S. Federal income tax purposes
or (b) are such an entity, but none of the direct or indirect beneficial owners
of any of the interests in us have allowed or caused, or will allow or cause,
80% or more (or such other percentage as the Seller may establish prior to the
time of such proposed Transfer) of the value of such interests to be
attributable to our ownership of Certificates.

                  4. We understand that no subsequent Transfer of the
Certificates is permitted unless (i) such Transfer is of a Certificate with a
denomination of at least $1,000,000 and (ii) the Depositor consents in writing
(which consent may be withheld for any reason or for no reason) to the proposed
Transfer; provided, however, that no such consent shall be required where the
proposed transferee is, and at the time of the Transfer will be, a holder of a
Certificate.

                  5. We understand that the opinion of tax counsel that the
Trust is not a publicly traded partnership taxable as a corporation is dependent
in part on the accuracy of the representations in paragraphs 2, 3 and 4.

                  6. We are a "qualified institutional buyer" (within the
meaning of Rule 144A under the Securities Act) (a "QIB") and we are acquiring
the Certificates for our own account or for the account of a QIB for investment
purposes and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act, and have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Certificates, and we and any accounts
for which we are acting are each able to bear the economic risk of our or their
investment. We acknowledge that the sale of the Certificates to us is being made
in reliance on Rule 144A.

                  7. We are acquiring each of the Certificates purchased by us
for our own account or for a single account (which is a QIB and from which no
resale, pledge, or other transfer may be made) as to which we exercise sole
investment discretion.

                  8. We are not (A) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to Title I of ERISA, (B) a plan described in Section
4975(e)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), (C) a
governmental plan, as defined in Section 3(32) of ERISA, subject to any Federal,
state or local law which is, to a material extent, similar to the provisions of
Section 406 of ERISA or Section 4975 of the Code, (D) an entity whose underlying
assets include plan assets by reason of a plan's investment in the entity
(within the meaning of Department of Labor Regulation 29 C.F.R. ss. 2510.3-101)
or (E) a person investing "plan assets" of any such plan (excluding, for
purposes of this clause (E), any entity registered under the Investment Company
Act of 1940, as amended).

                                       D-2

<PAGE>

                  9. We are a person who is either (A) (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity organized
in or under the laws of the United States or any political subdivision thereof
or (iii) a person not described in (i) or (ii) whose ownership of the
Certificates is effectively connected with such person's conduct of a trade or
business within the United States (within the meaning of the Code) and who
provides the Depositor and the Trust an IRS Form 4224 (and such other
certifications, representations or opinions of counsel as may be requested by
the Depositor or the Trust) or (B) an estate or trust the income of which is
includible in gross income for United States Federal income tax purposes,
regardless of source.

                  10. We understand that any purported Transfer of any
Certificate (or any interest therein) in contravention of the restrictions and
conditions (including any violation of the representation in paragraph 3 by an
investor who continues to hold such Certificates occurring any time after the
Transfer in which it acquired such Certificates) in paragraphs 1 through 9 above
shall be null and void (each, a "Void Transfer"), and the purported transferee
in a Void Transfer shall not be recognized by the Trust or any other person as a
Certificateholder for any purpose.

                  11. We agree that if we determine to Transfer any of the
Certificates we will cause our proposed transferee to provide to the Trust and
the Certificate Registrar a letter substantially in the form of this Exhibit D
or Exhibit E to the Trust Agreement, as applicable.

                  You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.

                               Very truly yours,

                               By: ___________________________________
                                   Name:
                                   Title:

Securities To Be Purchased:
$________________  principal balance of Certificates

                                       D-3

<PAGE>

                                                                      EXHIBIT E

                          [FORM OF INVESTMENT LETTER --
                       INSTITUTIONAL ACCREDITED INVESTOR]

                                                                      [Date]

MMCA Auto Owner Trust 2000-2
c/o Wilmington Trust Company
     as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890-0001
Attention:  Corporate Trust Administration

Wilmington Trust Company
  as Certificate Registrar
Rodney Square North
1100 North Market Street
Wilmington, Delaware  19890-0001
Attention:  Corporate Trust Administration

Ladies and Gentlemen:

                  In connection with our proposed purchase of the Asset Backed
Certificates (the "Certificates") of MMCA Auto Owner Trust 2000-2 (the "Trust"),
a trust formed by MMCA Auto Receivables Trust (the "Depositor" or "Seller"), we
confirm that:

                  1. We agree to be bound by the restrictions and conditions set
forth in the Amended and Restated Trust Agreement dated as of November [ ], 2000
(the "Trust Agreement") relating to the Certificates and we agree to be bound
by, and not to resell, transfer, assign, participate, pledge, or otherwise
dispose of (any such act, a "Transfer") the Certificates except in compliance
with, such restrictions and conditions and the Securities Act of 1933, as
amended (the "Securities Act").

                  2. We have neither acquired nor will we Transfer any
Certificate we purchase (or any interest therein) or cause any such Certificates
(or any interest therein) to be marketed on or through an "established
securities market" within the meaning of section 7704(b)(1) of the Internal
Revenue Code of 1986, as amended (the "Code"), including, without limitation, an
over-the-counter-market or an interdealer quotation system that regularly
disseminates firm buy or sell quotations.

                                       E-1

<PAGE>

                  3. We either (a) are not, and will not become, a partnership,
Subchapter S corporation, or grantor trust for U.S. Federal income tax purposes
or (b) are such an entity, but none of the direct or indirect beneficial owners
of any of the interests in us have allowed or caused, or will allow or cause,
80% or more (or such other percentage as the Depositor may establish prior to
the time of such proposed Transfer) of the value of such interests to be
attributable to our ownership of Certificates.

                  4. We understand that no subsequent Transfer of the
Certificates is permitted unless (i) such Transfer is of a Certificate with a
denomination of at least $1,000,000 and (ii) the Depositor consents in writing
(which consent may be withheld for any reason or for no reason) to the proposed
Transfer; provided, however, that no such consent shall be required where the
proposed transferee is, and at the time of the Transfer will be, a holder of a
Certificate.

                  5. We understand that the opinion of tax counsel that the
Trust is not a publicly traded partnership taxable as a corporation is dependent
in part on the accuracy of the representations in paragraphs 2, 3 and 4 and that
in addition to being subject to having its purchase rescinded, it will be liable
for damages.

                  6. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and we are
acquiring the Certificates for investment purposes and not with a view to, or
for offer or sale in connection with, any distribution in violation of the
Securities Act, and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our investment in
the Certificates, and we and any accounts for which we are acting are each able
to bear the economic risk of our or their investment.

                  7. We are acquiring each of the Certificates purchased by us
for our own account or for a single account (each of which is an institutional
"accredited investor" and from which no resale, pledge or other transfer may be
made) as to which we exercise sole investment discretion.

                  8. We are not (A) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to Title I of ERISA, (B) a plan described in Section
4975(e)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), (C) a
governmental plan, as defined in Section 3(32) of ERISA, subject to any Federal,
state or local law which is, to a material extent, similar to the provisions of
Section 406 of ERISA or Section 4975 of the Code, (D) an entity whose underlying
assets include plan assets by reason of a plan's investment in the entity
(within the meaning of Department of Labor Regulation 29 C.F.R. ss. 2510.3-101)
or (E) a person investing "plan assets" of any such plan (excluding, for
purposes of this clause (E), any entity registered under the Investment Company
Act of 1940, as amended).

                                      E-2

<PAGE>

                  9. We are a person who is either (A) (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity organized
in or under the laws of the United States or any political subdivision thereof
or (iii) a person not described in (i) or (ii) whose ownership of the
Certificates is effectively connected with such person's conduct of a trade or
business within the United States (within the meaning of the Code) and who
provides the Depositor and the Trust an IRS Form 4224 (and such other
certifications, representations or opinions of counsel as may be requested by
the Depositor or the Trust) or (B) an estate or trust the income of which is
includible in gross income for United States Federal income tax purposes,
regardless of source.

                  10. We understand that any purported Transfer of any
Certificate (or any interest therein) in contravention of the restrictions and
conditions (including any violation of the representation in paragraph 3 by an
investor who continues to hold such Certificates occurring any time after the
Transfer in which it acquired such Certificates) in paragraphs 1 through 9 above
shall be null and void (each, a "Void Transfer"), and the purported transferee
in a Void Transfer shall not be recognized by the Trust or any other person as a
Certificateholder for any purpose.

                  11. We agree that if we determine to Transfer any of the
Certificates, we will cause our proposed transferee to provide to the Trust and
the Certificate Registrar a letter substantially in the form of this Exhibit F
or Exhibit E to the Trust Agreement, as applicable.

                  You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.

                                        Very truly yours,

                                        By: _________________________________
                                            Name:
                                            Title:

                                       E-3

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